Please note in the March 2023 budget the government announced the abolishment of the life time allowance and changes to the annual allowance. The detail of these changes have yet to be finalised. We are currently waiting for the Spring Finance Bill 2023 which will provide the legislative framework to support these changes. Until this is received we will be unable to comment further.
However Pensions schemes newsletter 148 — March 2023 – GOV.UK (www.gov.uk) published on 17 March 2023 includes some more detail around the proposed changes and also the tax payable on types of lump sum.
The information below is the current position.
HM Revenue and Customs impose two controls on the amount of pension savings you can make without having to pay extra tax. These controls are known as the annual allowance and lifetime allowance.
This is in addition to any income tax you pay on your pension once it is in payment.
As Pension Administrators, we are legally obliged to provide scheme members with a Pensions Savings Statement relating to Annual Allowance, where the pension savings in the pension input period are more than the annual allowance. This must be provided before 6th October following the end of the relevant tax year.
If it is an estimate of your Annual Allowance that you require, please use the LGPS Annual Allowance – Quick Check Tool, or alternatively, contact your Independent Financial Advisor (IFA) to arrange this. To find your nearest IFA check out the MoneyHelper website.
More information, including factsheets covering both annual and lifetime allowance, can be found on the national LGPS website at Tax controls and your pension and you can watch the videos below.