Lifetime Allowance (LTA) for pensions contributions – Budget 20 March 2013

There are limits on how much can be saved in registered pension schemes. There

is an annual limit on the total amount of an individual’s tax-relieved annual

pension savings, including employer contributions. Unused annual allowance

from the three previous tax years for the individual can be carried forward and

added to the annual allowance.

There is also the lifetime allowance, on the total amount of tax relieved pension

savings that an individual can have over their lifetime. For the tax year which is

just ending, 2012-13, the standard lifetime allowance is £1.5 million.

From the tax year 2014-15 onwards it was confirmed that the annual allowance

will be reduced to £40,000 and the standard lifetime allowance to £1.25 million.

There will be a transitional protection regime (fixed protection 2014) for

individuals with UK tax relieved pension rights of more than £1.25 million or who

think they may have rights in excess of £1.25 million by the time they take their

pension benefits.

We will need to notify HM Revenue & Customs (HMRC) on your behalf by 5

April 2014 if you want to rely on fixed protection 2014 and will be entitled to

a personal lifetime allowance of the greater of £1.5 million and the standard

lifetime allowance.

Back to Main Page – Budget 20 March 2013

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