Autumn Statement: EY response to pension tax restrictions
Patrick Stevens, Tax Partner at EY comments on pension tax restrictions:
"The Chancellor’s announcement on the restrictions on pension relief to £40,000 per annum, together with a reduction in the lifetime limit from £1.5m to £1.25m, is the second time we have seen a change in this Parliament. This will deter contributions above this annual amount and will particularly impact some of those within defined benefits schemes, including many civil servants, teachers and nurses. Last year’s changes allow the resulting large tax charges to be offset from pension pots, avoiding an immediate cash charge.
"Overall, this has been well trailed but will add one more deterrent to pension saving. The diversion of funds elsewhere can be expected to increase the costs of those that continue to save, particularly in employer pensions. Whilst the reduction in the annual limit was less than was speculated before the Statement, many will be hoping that this is now the last change in this complex area."