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2009 Budget and its effect on pension planning
Following Alistair Darling's budget speech on 22 April 2009, and the announcement that higher rate tax relief would be restricted on pension payments made by high-income individuals, advisers have been asking for further information on how it will work in practice.
This is especially necessary because anti-forestalling legislation is applicable now, with no lead in period in which to plan.
This series of notes is designed to provide some of the small print on the anti-forestalling legislation. In order to maintain clarity, the notes are split into seven parts, with the first note providing a high level summary of the key issues which are most likely to affect IFAs and their clients:
- Key issues for financial planners
- High-income individuals
- Protecting existing payments
- Calculating the protected pension input amount (PPIA)
- Contributions refund lump sums (CRLS)
- What you can do for high income clients
- Treasury amendment.
The rules as they are
It should be noted that these notes are designed to provide more information on what the current legislation is, and not what might (or even should) be.
Following industry representation the Government announced an amendment to the original rules. This removes some of the unintended consequences of the original proposals, particularly in relation to the self-employed, and is very welcome.
A summary of the amendment is given in note 7.
The Treasury has indicated that they will not rule out further changes based on industry feedback.
If you want to provide feedback you may choose to do so through one of the professional bodies who will be responding to the legislation. The more evidence these bodies have the more likely they can effect a change. You can email your comments to the
- Association of British Insurers at info@abi.org.uk
- Association of Independent Financial Advisers at info@aifa.net
- Society of Pension Consultants at info@spc.uk.com.
Note - The information provided is based on our current understanding of the 2009 Budget and associated documents and may be subject to alteration as a result of changes in legislation or practice.
Published 22 May 2009
Updated 29 July 2009
