It is an opportunity to crystallise your pension tax free
Here at SuisseRock, UK pension planning has been at the core of our business since the very beginning. We were shocked when in this years spring budget the chancellor Jeremy Hunt decided to abolish the lifetime allowance completely. There was speculation on the days leading up to the the budget announcement that the allowance might be increased, however, to remove it all together took most by surprise.
So what does this mean?
The lifetime allowance is how much an individual can accumulate in their pension pot over their working lifetime before additional taxes are levied. Prior to the budget the lifetime allowance was set at £1,073,100 and pension capital above this amount would be taxed at either 25% if taken as income or 55% if taken as a lump sum.
As of the 6th April 2023 this will no longer apply and one can accumulate as much pension as they are able, without paying additional taxes.
Will the decision be overturned?
This decision has come under a great deal of scrutiny from opposing parties and Labour have vowed to reinstate the lifetime allowance (LTA) if elected, arguing that the government’s plan to abolish the allowance is the “wrong priority, at the wrong time, for the wrong people”. The next United Kingdom general election is scheduled to be held no later than 28 January 2025 and with Labour 23% ahead in the polls.
Pollster Find Out Now and election experts Electoral Calculus have run a VI poll on voting intention for Westminster on behalf of the Sunday Telegraph. This poll, involving over 1,400 respondents, carried out from 1 – 3 March.
The poll asked GB residents whether and how they intend to vote if there were an imminent general election.
- Labour lead of 23% over Conservatives
- Predicted Labour landslide
The headline voting intention is shown in the highlighted column:
This gives an estimated Labour lead over the Conservatives of 23pc. That is very significant lead, which would lead to a Labour landslide in a general election. If there were a general election now, and these figures were right, Labour would win a massive landslide with 499 seats in the Commons, and the Conservatives would be reduced to just 69 seats.
A Golden opportunity
Of course the above information is only a prediction of what might happen at the next election. However, what is clear is that Labour have vowed to reinstate the lifetime allowance if they are elected.
As of the 6th April 2023 there is a golden opportunity to crystallise your pension benefits without the lifetime allowance tax charge being applied. If you have a pension value close to or exceeding the previous LTA of £1,071,300 then utilising a QROPS could be extremely beneficial.
A QROPS enables you to crystallise your pension benefits at the current value and any growth would be free of any future LTA charges and is a solution available to non UK residents.
Find out more
If you would like to find out more about your pension UK options then why not speak with one of our advisors who will explain in detail what solution is best suited to your circumstances.
