Jaskarn Pawar gives a brief overview of the changes to the Lifetime Allowance …
The lifetime allowance has reduced (again). So now we’re officially into the new tax year the lifetime allowance is now £1m. This is the total amount of all Pension assets you are allowed to hold without any additional tax implications being imposed on you.
If you were previously under the £1.25m limit but now are above the £1m limit then you should be able to apply for protection in due course. I believe this will be available in June 2016. If you have any questions about this then please do call us on 01604 211234 or e-mail me at email@example.com
The £1m allowance does sound like a lot of money but if you’re in a final salary scheme for example then an annual income of £40,000 is the equivalent of £800,000 so it’s relatively easy to get up to £1m if you’re also contributing to another Pension.
This can seriously impact on your investment strategy, if for example you need to look elsewhere to invest your money for fear of exceeding the allowance either now or in the future.