The complex matter of pensions tax simplification

The new 'simplified' pensions tax regime introduces a number of complex rules, particularly those regarding its central feature: the single lifetime allowance (LTA).

The value of the individual's total pension benefits from all sources will be assessed against the LTA. There will also be an annual allowance to ensure workers do not try to evade the rules by investing large sums in their pension funds over short periods.

  • Complexity is price of tax simplification  and Lump sums and death benefits examined    IRS journal Occupational Pensions examines the main features of the proposed system, effective from April 2006.

  • Pensions Tax Simplification    Read the draft regulations, as published on the Inland Revenue website.

    Also

    EU takes a tough line on pensions tax discrimination   From Occupational Pensions.

    Treasury sticks to its lifetime limit   Read Occupational Pensions' analysis of the government's initial proposals.

    Pensions: future developments   XpertHR's employment law reference manual provides further guidance on the new pensions taxation regime.