Cuts to pension and dividend allowances to be dropped!
A large cut to the amount of money pensioners can save into their pensions has been put on hold. The Government rushed to pass the Finance Bill ahead of the next election. Chancellor Philip Hammond cut the annual pensions savings limit from £10,000 to £4,000 a year from April for those who have already made use of the “pension freedoms” by drawing their pension (those who have not accessed their pension have an annual allowance of up to £40,000 pa).
The cut was seen as unfair, specifically to those in their 50s, so many will see the tabled amendment to the Finance Bill to removing this clause as a sensible step.
Steve Webb the director of policy of Royal London, stated “The situation is confused. Technically, the £10,000 allowance is still in place but IFAs would be unwise to advise their clients to make use of the £10,000 MPAA allowance as there is always the danger that the Conservatives, if re-elected, would introduce the change retrospectively.”
In addition, the second proposed exclusion from the Bill is the cut in the dividend allowance. In fact, this has taken it from its current level of £5,000 to £2,000.
IEP Financial – Independent Financial advice in Brighton Hove and Eastbourne is authorised and regulated by The Financial Conduct Authority (FCA)
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