Pension tax allowance changes

In his March budget, the Chancellor Rishi Sunak announced that no one who earns less than £200,000 a year will be affected by the tapered Annual Allowance. The tapered Annual Allowance gradually reduces the Annual Allowance for those on high incomes, meaning they are more likely to face an annual tax charge on their pension contributions.

Mr Sunak raised the point at which the tapered Annual Allowance kicks in from £150,000 to £240,000, as of 6 April 2020. The Chancellor also announced measures to reduce the minimum Annual Allowance to £4,000 for those with incomes above £300,000 (the previous minimum Annual Allowance which applied to the highest earners was £10,000).

The Lifetime Allowance (LTA) is the maximum amount of pension savings you can have at retirement from all pension schemes without incurring an additional tax charge. The Lifetime Allowance rises annually with inflation as measured by the Consumer Prices Index, so for the 2020/21 tax year it will be £1,073,100.

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