The Government announced on 5 December 2012 that in order to support its objective of a system of pensions tax relief that is “fair, affordable and sustainable”, from 2014-15 onwards:
• the Annual Allowance would be reduced from £50,000 to £40,000; and
• the Lifetime Allowance would be reduced from £1.5 million to £1.25 million.
As a result of the latter, it will be necessary to introduce a further form of transitional protection, which will follow on from previous ‘Enhanced’, ‘Primary’ and ‘Fixed’ Protection measures that have previously existed following the original introduction and previous movements in the Lifetime Allowance.
HMRC and HM Treasury have now published a consultation document which sets out the framework of how “Individual Protection 2014” will work and to seek comments on the detail of the rules.
The new rules are expected to form part of Finance Bill 2014.