Pension Tax Relief Cuts Resurrected

By Tax

Retirement savers who have taken cash from their pension face a cap on future savings in the government’s summer finance bill.

Currently, savers who have taken cash from their pension can pay in an extra £10,000 a year and pick up the full tax boost on their savings.

In the Spring 2017 Budget, Chancellor Phillip Hammond wanted to scrap this limit and haul the annual savings cap down to £4,000.

This money purchase annual allowance (MPAA) was put on the back burner in the run up to the last General Election as one of several controversial sections of the finance bill dropped as the government horse-traded legislation due to a lack of Parliamentary time before the poll.

But the MPAA cut is back – along with several other tax measures.

No policy changes

“The Finance Bill introduced in March 2017 provided for a number of changes to tax legislation that were withdrawn after the calling of the general election. The government confirmed at the point they were withdrawn that there was no policy change and that these provisions would be legislated for at the first opportunity in the new Parliament,” said a spokesman.

“The government confirms that intention. It expects to introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions.

“Where policies have been announced as applying from the start of the 2017-18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained.

“Those affected by the provisions should continue to assume that they will apply as originally announced”.

Non-dom measures go ahead

Other clauses of the bill cover taxing the income and gains of non-domiciled UK residents and inheritance tax on UK property held by overseas owners.

At the same time, the government also published updated proposals on a project to make tax digital.

Online tax reporting will start for businesses from April 2019, while provisions for individuals will follow after the system has passed trials expected to end by April 2020.

The government also hopes the extra time will allow taxpayers to convert to digital record-keeping in time to meet the deadlines.

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