City Trustees - part of Mattioli Woods



News and Media

17 June 2013

HMRC publish individual protection 2014 proposal plans in light of lifetime allowance legislation

HM Revenue and Customs (HMRC) has published proposal guidance for a new form of protection, which will safeguard individuals with existing pension savings, with the expectation that the lifetime allowance (LTA) will remain at £1.5 million.

Chancellor of the Exchequer, George Osborne, confirmed in December 2012 that the LTA will be cut from £1.5 million to £1.25 million from April 2014.

In light of this reduction, the Government previously published proposals for revisions to the fixed protection regime. The proposal of fixed protection 2014, will allow individuals to retain the current LTA limit of £1.5 million, provided they commit to making no further savings within their pension scheme.

Under the new plans, individual protection 2014 will give savers with pension funds of more than £1.25 million a personalised LTA based on the value of their pension savings as of 5 April 2014, which will be limited to £1.5 million. However, the new plans will allow savers to continue to accrue benefits.

Individual protection is likely to achieve Royal Assent in summer 2014, and would benefit savers who want to make savings in their pension scheme after 5 April 2013.

Unlike fixed protection 2014, there will be three years from 6 April 2014 in which to apply for individual protection. HMRC has reported that individuals can apply for both fixed protection 2014 and individual protection 2014, subject to meeting eligibility conditions.

 

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