The Chancellor will make his Budget 2016 speech on Wednesday 16th March 2016. This is when we expect to hear the outcome of the review of pensions incentives announced last March and followed by the Government’s consultation “Strengthening the Incentive to Save” in July 2015.
As we approach Budget day lots of rumours of changes are circulating, including the possibility of a removal of the tax free lump sum which seems to have gained some attention over the last few days.
Naturally we don’t know what will be announced; we have seen many rumours in the run up to previous Budgets that have not come to fruition and then there have been major changes that nobody could realistically have predicted, such as the Freedom and Choice reforms that took everyone by surprise in 2014.
Restrictions to Pensions Tax Relief?
This year’s Budget is particularly difficult to predict as everything seems to be within scope of the review. The changes could affect all areas of pensions such as the rate and timing of tax reliefs/incentives, salary sacrifice, annual allowances, carry forward, retirement ages, lifetime allowance and of course the availability and amount of tax free lump sum.
There could also be closer links between pensions and ISAs, or a change in the tax advantages that apply to growth and income within pension funds. What we do know is that the review was triggered by the spiralling cost of pensions tax relief, so it seems likely that this will be restricted in some way. Also, changes tend to affect some more than others.
Whether we see changes to the current system, or a new one that replaces it from Budget Day, remains to be seen.
If you would like any further information about your pension and how the Budget 2016 will impact you, please contact firstname.lastname@example.org, visit www.hghwealth.co.uk or call 01904 655202 for independent, expert financial advice.
This article was produced with the kind permission of Nigel Bennett at InvestAcc Ltd.
HGH Wealth Management Ltd is an appointed representative of InvestAcc Ltd which is authorised and regulated by the Financial Conduct Authority. Company No. 3203520. Registered Office: Club Chambers Museum Street York YO1 7DN