View more on these topics

Lifetime allowance cut to cost £50m


Employers and pension schemes face increased costs of nearly £50m resulting from the lowering of the lifetime allowance from £1.25m to £1m.

From April 2016 individuals’ tax free pension savings will be capped at £1m.

The allowance will be increased in line with CPI inflation from 2018 onwards.

In a policy paper published today the Government estimates employers and schemes will be hit with a one-off cost of £46.6m and an additional £200,000 a year in running costs.

In addition, HMRC expects to spend £2.4m making changes to its IT systems to cope with the new protection regime and an increased volume of enquiries and an extra £500,000 on staff over five years.

Around 55,000 people will be affected by the cut in 2016 and 2017, the Government says.

As announced following the March 2015 Budget, the Government will net £1.9bn in savings from the changes over the next five years.

The lifetime allowance has been £1.25m since April 2014. It was previously £1.5m before being cut by the Coalition Government in the 2012 Autumn Statement.



FoI reveals surge in Govt lifetime allowance tax take

Revenues from breaches of the lifetime allowance on pension contributions rose more than three-fold during the last Parliament, official figures reveal. Figures published following a Freedom of Information request by Suffolk Life show HM Revenue & Customs took in £94.2m in tax as a result of contributions to pots in excess of the allowance in […]


Lifetime allowance cut could see family pensions targeted

The Government’s plans to limit the lifetime allowance on pension contributions could lead to a crackdown on family pension schemes, experts predict. Proposals to lower the lifetime allowance from £1.25m to £1m were revealed in the last Coalition budget and are due to take effect in April 2016. The Conservatives also want to taper the […]


Tony Byrne: Beware the lifetime allowance Venus flytrap

There was a time when, on a change of government, there was an unwritten rule the incoming party would not reverse the legislation introduced by the previous one. In addition, the concept of retrospective legislation did not exist. This was considered fair and reasonable, especially because it allowed individuals to plan their lives in accordance […]

Solving the income puzzle

There is a puzzle at the centre of financial markets. The global economy is growing, there are signs of inflation and interest rates are going up, yet yields remain low. In this article, James Foster, manager of the Artemis Monthly Distribution fund, unpicks this conundrum and looks at where investors can find income. There is […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Not to mention the fees incurred by clients requiring additional professional advice as a consequence of this folly.

  2. The article fails to mention the LTA was £1.8 million before being cut to £1.5 million (where the article takes up the story) before being cut to £1.25 million to then being cut by £1 million.
    There have been some utter awful pieces of pension legislation over the years but this is right up there with the absolute worst.
    Just a reminder of some of the history. When pensions simplification came in (after years of thought through joined up thinking) it wasn’t perfect (but compared to the current stuff going on its looking a hell of a lot better) but they recognised that in setting a LTA (of £1.5 million) that it needed to increase to not knacker up the whole process. They even legislated for the increases in the first 5 years taking it from £1.5 million to the £1.8 million. The idea then was the £1.8 mill would be increased in line with something like RPI. Not slashed! Madness.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm