Report: Changes to pension tax relief
- From the 2016/17 tax year, individuals with income deemed to be more than £150,000 will be subject to an Annual Allowance of less than £40,000.
- From 6 April 2016, the Lifetime Allowance will reduce from its current level of £1.25m to £1m. However, the government has committed to increasing the Lifetime Allowance each year in line with inflation (starting from 6 April 2018).
- Considered together, the changes may encourage some individuals to consider alternative means of saving for retirement outside of traditional pension savings, particularly those earning over £150,000.