HM Treasury has announced a second Finance Bill 2017. For pensions, this aims to reduce the money purchase annual allowance to £4,000 backdated to 6 April 2017, and allows for the pension advice tax exemption.
The Treasury has confirmed that a Finance Bill will be introduced “as soon as possible” after the summer recess. The new Bill will legislate for all policies that were included in the pre-election Finance Bill (now the Finance Act 2017), but which were dropped before the final version to ensure that the Finance Act 2017 received Royal Assent before Parliament was dissolved for the 2017 General Election.
The intention is that all policies originally announced to start from April 2017 will be effective from that date. This includes:
the reduction of the money purchase annual allowance from £10,000 to £4,000
the pension advice tax exemption – this allows employers to pay for individuals to take relevant pensions advice, or reimburse individuals for the costs of such advice, without any liability for income tax arising, provided that the payment did not exceed £500 in a tax year
Reducing the money purchase annual allowance to £4,000 is controversial and so it may be difficult to push through Parliament. However, in deciding what to say to members, the prudent approach must be to say to them that they should work on the basis that it will become law.
Published:21 July 2017
Pensions Law Update - July 2017
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