Pensions

Reduction in Lifetime Allowance

It is intended to introduce legislation in the next Parliament to reduce the pension lifetime allowance from 6 April 2016 from £1.25m to £1m, accompanied by fixed and individual protection arrangements. From 2018 the allowance will rise in line with the consumer prices index.

Annuity Flexibility

It is intended to introduce legislation in a future Finance Bill, to be effective from April 2016, to allow those already in receipt of an annuity to sell to a third party and take the proceeds directly or draw them down over a number of years. Income tax would be at the individual’s marginal rate.

Taxation of Inherited Annuities

From 6 April 2015, beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity will be able to receive any future payments from such policies tax-free where no payments have been made to the beneficiary before 6 April 2015. The tax rules will also be changed to allow joint life annuities to be paid to any beneficiary. Where the individual was over 75, the beneficiary will pay their marginal rate of income tax.