Five tax changes coming in tomorrow
Tomorrow marks the start of the tax year, and it also marks the day a number of pieces of pensions legislation come into force. It follows Monday’s green paper revealing details of the £140 single-tier state pension.
Pension changes effective from 6 Apr:
1). Pension contribution cap for many high earners rises from £20k to £50k.
- However high earners can use ‘carry forward’ to pay in up to £200k.
- Like this year up to 50% tax relief is available on pension contributions (60% for some)
- Higher National Insurance rates make salary sacrifice more attractive
2). Tomorrow marks the 10th anniversary of the universal £3,600 pension allowance (for non-earning spouses and children), but it has never been increased.
3). This is the last year for contracting out of the State Second Pension into a Personal Pension or SIPP.
4). Default retirement age abolished- this will lead to longer working lives and has implications for final salary schemes and lifestyled pension funds.
5). The end of compulsory annuitisation; investors can now run a Drawdown plan for as long as they wish with some being able to make unlimited withdrawals State Second Pension/SERPS and public sector pensions switch from RPI to CPI increases.
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