Taxation of Pensions Bill: Draft legislation and guidance issued
06 August 2014
HMRC have published draft pensions legislation, with notes and guidance, for consultation.
The published documents include:
· draft legislation
· an Explanatory Note for the autumn Taxation of Pensions Bill
· a draft TIIN and
· draft guidance
The documents provide details to the change that is proposed to the pension tax rules, from April 2015, to give individuals aged 55 and over greater flexibility to access their pension savings. The changes in the published draft clauses will:
· remove the higher tax charges where people take pensions under money purchase pension savings as they wish;
· increase the flexibility of the income drawdown rules by removing the maximum ‘cap’ on withdrawal and minimum income requirements for all new drawdown funds from 6 April 2015;
· enable those with ‘capped’ drawdown to convert to a new drawdown fund once arranged with their scheme
· enable pension schemes to make payments directly from pension savings with 25 per cent taken tax-free (instead of a tax-free lump sum)
· introduce a limited right for scheme trustees and managers to override their scheme’s rules to pay flexible pensions from money purchase pension savings
· remove restrictions on lifetime annuity payments;
· ensure that individuals do not exploit the new system to gain unintended tax advantages by introducing a reduced annual allowance for money purchase savings where the individual has flexibly accessed their savings; and,
· increase the maximum value and scope of trivial commutation lump sum death benefits.
There is a technical consultation period on the draft regulations of four weeks where views from interested parties are encouraged. Comments on the drafts should be sent by email to Pensions Policy by 3 September 2014.
Should you have any comments that you wish to add through the CIPP Policy team please contact Samantha Mann, Senior Policy & Research Officer and Advisory Service Manager at firstname.lastname@example.org