Changes to pensions tax allowances

The Annual Allowance (AA) is the maximum amount of tax-free pension savings you are allowed to make in one year to all pension schemes. From April 2014, the AA reduced from £50,000 to £40,000. From April 2015, there is a new AA of £10,000 for people who start taking benefits using the DC pension flexibilities, while still paying contributions into a defined contribution scheme. If you exceed the AA, you have to pay a tax charge. From 6 April 2016, there will be a tapered AA for high earners – reducing from £40,000 to £10,000. The Lifetime Allowance (the tax-free limit on the total value of your pension savings from all sources) is reducing from £1.25 million to £1 million from 6 April 2016. If the combined value of your benefits from all pension schemes (excluding the State pension) is higher than the LTA, you would have to pay a tax charge. The value of your Caterpillar benefits in relation to the LTA is shown on your annual benefit statement.  You can find further information about the Lifetime Allowance on the GOV.UK website  
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