A secondary market for annuities will give the Government over £1bn in tax receipts in the first two years, Budget documents reveal.
Yesterday, the Treasury published a consultation on creating a secondary market for annuities from April 2016.
A costings document reveals it expects to net £535m in 2016/17 and £540m in 2017/17 as individuals pay tax on the proceeds of annuity sales. However, by 2018/19 it will turn into a £130m loss. There will be a £120m loss in 2019/20.
In addition, the Government will take in nearly £2bn as a result of lowering the pensions lifetime allowance.
The amount people can save into a pension tax free was cut to £1m down from £1.25m. The new allowance will take effect from 2016/17, but will be indexed with CPI inflation from 2018/19.
In 2015/16 the Exchequer will make a £60m gain, rising to £300m in 2016/17, £420m in 2017/18, £550m in 2018/19, and £590m in 2019/20.