So the Autumn Statement was delivered and despite a few leaks it contained no great surprises. Here is our brief summary of the relevant changes.
As widely predicted the annual allowance for pensions was reduced from £50,000 to £40,000. This move follows George Osborne’s 2010 budget when he cut the annual allowance from £255,000 to £50,000. The Lifetime Allowance will also be reduced from £1.5million to £1.25 million, this and the reduction in the annual allowance will save up to £1billion in tax relief each year.
Giving the reduction in the lifetime allowance, the government is also planning a new protection regime, which will give individuals a lifetime allowance equal to the greater of the value of their pension rights on 5 April 2014, up to £1.5 million, and the standard lifetime allowance, which will be £1.25 million from April 2014.
Whilst pensions have been hit hard, one glimmer of hope was the far less expected announcement to increase the income limit on capped drawdown back up to 120%. This is up on the previous 100% restriction with took effect in the 2010 reform, with a view to prevent investors depleting their pension pots. Some positive news for many pensioners.
In another money raising measure, the IHT nil rate band, which has been frozen since 2009 at £325,000, is set to increase by 1% in 2015-16 to £329,000. ISA’s also saw the limit is to increase to £11,520 and the Government also confirmed it is reviewing the possibility to of holding AIM listed stocks and shares. The personal allowance was also up as the government took another step towards it reaching £10,000. It was increased £235 for April 2013 with the total increase for personal allowance next year by £1,335.
This means from April next year people working in Britain can receive £9,440 before paying income tax, compared the £9,205 target the coalition government had initially set for April 2013 in this year’s Budget.