Abolition of the Lifetime Allowance: PLSA response to HMRC consultation
In July, HMRC published a consultation on its draft legislation of the abolition of the lifetime allowance (LTA). This follows on from the interim measure that was put in place in the aftermath of the Chancellor’s announcement at the Spring Budget 2023.
The PLSA has responded to this consultation welcoming the Government’s intent to enact a long-term legislative solution. The PLSA sits on HMRC’s Pension Stakeholder Forum and department officials have discussed the abolition of the LTA with the group.
Concerns remain about a number of aspects of the consultation. It would appear that the draft legislation is being used as a vehicle to quietly introduce a new form of pension taxation. The Treasury are seeking to change this so that any unused amounts being passed on exceeding the same level as the LTA - £1,073,100 - would be subject to taxation at the beneficiaries’ marginal rate. We have expressed that further clarity is required and a stand-alone consultation on this measure would be the most appropriate way for the industry to offer its feedback.
Due to a lack of information in the published document, we have requested more detail on the timeline/staging of the measures and whether new disclosure requirements will be necessary for member information.