Lifetime Allowance to Rise by CPI in April 2018
21 July, 2017
It was confirmed today by HM Treasury that the UK’s lifetime allowance will increase by the consumer prices index from April 2018.
The lifetime allowance is the amount of savings you can take from all of your combined UK occupational and personal pension schemes without facing a UK tax charge (which applies irrespective of the fact you are no longer a UK resident and/or taxpayer). Since 6 April 2016 if you take more than £1MM from your combined UK pension savings, you may face a tax charge unless you have existing protections such as Fixed Protection 2016.
The planned increase was announced by Chancellor George Osborne in his 2015 budget, but given recent changes in government there had been some concern that the planned increase may be dropped. While the increase will be small – CPI in June was 2.6% – it still provides some relief by increasing the threshold for the lifetime allowance tax charge beyond £1MM.