HMRC issued its latest pension schemes newsletter 70 on 21 July 2015. This provided a summary of all the announcements in the Budget on 8 July 2015 in connection with tax relieved pension savings, see selected detail below or please click on the link for full details.

A. TAPERED ANNUAL ALLOWANCE (AA)

From 6 April 2016, there will be a tapered reduction in the amount of the AA. This will apply to individuals whose income, including the value of their total pension input amount, is over £150,000. For every complete £2 their income exceeds £150,000 the AA will be reduced by £1, up to a maximum reduction of £30,000 for individuals whose income is over £210,000. The total pension input amount for this purpose will be calculated in the same way as it is for working out the value of pension savings for the AA.
However, where an individual’s taxable income is no more than £110,000 they will not be subject to the tapered AA.
Pension input periods will be aligned with the tax year for the year 2016 to 2017 onwards. Transitional rules for the 2015 to 2016 tax year will be introduced to protect savers who might otherwise be impacted by the alignment of their pension input periods.
Legislation is included in the Summer Finance Bill 2015 to 2016.

B. LIFETIME ALLOWANCE

In the Budget on 8 July 2015 the Chancellor of the Exchequer confirmed that, as previously announced, the lifetime allowance for pension savings will be reduced from £1.25 million to £1 million from 6 April 2016. Transitional protection will be introduced alongside this reduction to ensure the change is not retrospective.
The lifetime allowance will also be indexed annually in line with the Consumer Prices Index from 6 April 2018. Legislation will be included in Finance Bill 2016.
There will be 2 protection regimes which will have the same conditions as the previous fixed and individual protection regimes for individuals who want to rely on them. That is for the new ‘fixed protection’ you must have no benefit accrual on after 6 April 2016, and for the new ‘individual protection’, you must have savings of at least £1 million on 5 April 2016.
The notification process will though be different, as individuals will not need to notify HM Revenue and Customs (HMRC) in advance where they want to rely on fixed protection or have 3 years to apply for individual protection. Instead, HMRC are considering options around removing the deadlines for applying for these protections. We will be discussing this informally with stakeholders over the next few weeks so that we can publish full details later this summer.
In the meantime, pension providers and employers should consider what communications they need in advance of 6 April 2016 to individuals who may be affected.

C. TAX ON LUMP SUM DEATH BENEFITS

For deaths on or after 6 April 2016, lump sum death benefits that are currently subject to the special lump sum death benefit charge of 45% will, when paid to an individual, be taxable at the recipient’s marginal rate.

D. SALE OF ANNUITIES

The changes to allow the sale of annuities announced at the March 2015 Budget will go ahead, but the start will be delayed until 2017 to give time to develop the most effective protection for consumers. The government’s response to the consultation and plans for implementation will be set out in the autumn.

E. CONSULTATION ON PENSIONS TAX RELIEF

HM Treasury have published a consultation document on strengthening the incentive to save: a consultation on pensions tax relief. The aim of the consultation is to look at how individuals can be better encouraged to save adequately for their retirement.

F. UNFUNDED EMPLOYER FINANCED RETIREMENT BENEFIT SCHEMES (LEGISLATION POTENTIALLY TO BE INCLUDED IN FINANCE BILL 2016)

HMRC will consult informally with stakeholders on how to tackle the use of unfunded employer financed retirement benefit schemes to obtain a tax advantage in relation to remuneration. Stakeholder meetings are expected to take place during the summer and further details will be published later.
https://www.gov.uk/government/publications/pension-schemes-newsletter-70-july-2015/pension-schemes-newsletter-70-july-2015