Chancellor Rishi Sunak delivered a budget that provided more support for workers, business and started to address the increasing borrowing that has been required during the pandemic. As always, our team was watching with interest to ensure that we were aware of the changes affecting the pensions industry:
a) Standard Lifetime Allowance (SLA):
The introduction of this measure will remove the indexation by the Consumer Price Index (CPI) of the standard Lifetime Allowance (LTA). The removal of this link means that the current amount of £1,073,100 will remain at this level for the tax years 2021/22 to 2025/26 inclusive.
As the standard LTA is not reducing, there will be no need to introduce any transitional protection arrangements.
b) Income tax bands of taxable income:
It should be noted that these values do not apply to Scotland who have their own bandings. They will apply to England (rUK) and Wales (C).
The income tax bands have been announced for the tax year 2021/22 and will remain at these levels up to the tax year 2025/26 inclusive:
The Personal Allowance is already set to be £12,570 for the 2021/22 and will remain at this level for the tax years 2022/23 to 2025/26 inclusive.
Other items of note:
1. The government intends to announce some consultations separately from the Budget. They will publish a Command Paper “Tax policies and consultations (Spring 2021)”. This will be published on 23 March 2021 (2.72).
2. Pensions regulation – The government will consult in the next month on whether certain costs within the charge cap affect pension schemes’ ability to invest in a broader range of assets (2/147). A consultation paper will be issued by the FCA.
The consultation that is ’taking steps to give the pensions industry more flexibility to unlock billions of pounds from pension funds into innovative new ventures’ is of interest. This could be great news for pensions savers who can benefit from increased returns from investing in the redevelopment of the UK’s infrastructure and economic initiatives.
The tax year end changes to our applications are currently being delivered to our clients. Please contact us at firstname.lastname@example.org to discuss how our fully managed and supported pensions administration technology can transform your business.