16 MARCH 2016
These include making lump sums payable on serious ill-health
tax free before age 75 and taxable at the individual’s marginal
rate when paid at age 75 or more. It will be possible to convert
dependants’ flexi-access drawdown accounts to nominees’ accounts
when dependants reach the age of 23, thereby avoiding a 45%
lump sum tax charge.
A trivial commutation lump sum payment will be allowed for
defined contribution pensions in payment, where total pension
savings would be under £30,000. Top-ups to fund dependants’
death benefits will be classed as authorised payments. Changes
will also be made to the treatment of charity lump sum death
benefits. The measures will take effect from the date of Royal
Assent to Finance Bill 2016.
Dependant scheme pensions
The calculation basis to determine whether a dependant’s scheme
pension exceeds the authorised limit will be simplified with effect
from 6 April 2016.
The tax rules on bridging pensions will be aligned with Department
for Work and Pensions legislation following the introduction of
the single-tier pension from 6 April 2016.
Employer financed pension advice
The income tax and NICs relief available for employer-arranged
pension advice will be increased from £150 to £500 from April
2017, ensuring that the first £500 of any advice received is
eligible for the relief.
Life insurance policies
The tax rules for part surrenders and part assignments of life
insurance policies will be changed to prevent excessive tax charges
arising on these products. The legislation is due in Finance Bill
2017, following consultation.
There will also be a consultation on changes to the categories
of assets that life insurance policyholders can choose to invest in
without giving rise to an annual tax charge under the personal
portfolio bond legislation.
Consider whether the
20% reduction in the
lifetime allowance for
2016/17 means you
should claim one of
the new transitional