The Lemon Fool

https://www.investorschronicle.co.uk/ideas/2023/10/23/how-do-i-appeal-against-an-unfair-pensions-tax-charge/ says:

IC wrote:The LTA is the amount of money an individual can keep in their pension funds without incurring a penal tax charge for having excessive pension savings. Due to the government abolishing the LTA charge this year, no charges are imposed if an individual accesses their pension savings after 6 April 2023, although tax reports on the LTA still have to be made.

I have a mate who retired this year (university academic), was about to retire at the end of March 2023 (when the LTA changes were announced), and his employer delayed his retirement until after April 2023. I think he would have been affected by the LTA (but I don't know this for certain, and I don't think he does), but having delayed his retirement until after April, he may have avoided having to deal with (and possibly pay) the LTA. However, as he retired after April, when the LTA was abolished, does he still have to report his LTA (as in "tax reports on the LTA still have to be made"), e.g. declare it on a tax return (or somewhere) but pay no tax on it? If so, is there a source somewhere that I can refer him to, so he is aware of this and can do something about it before it dosen't get done and HRMC come knocking.

I’m not an expert but I’d expect the pension administrator to do the reporting.

Best wishes, Steve

Steveam wrote:I’m not an expert but I’d expect the pension administrator to do the reporting

Thanks. Yes, that did cross my mind. But one individual may have several (many?) pension pots (and even some they've forgotten about from decades ago), and no one pension company can know about all an individual's other pension pots, or know if the individual is close to the LTA. The only other way might be if all pension companies report to HMRC and HMRC totting it all up, and getting the full picture on each individual ...

I'm no expert either but my understanding is that this is what the situation was before it was abolished:

- it is the individual's responsibility to monitor their percentage every time they make a withdrawal
- there are no ongoing requirements for an individual to report percentages to HMRC (via SA or any other method)
- the pension company issues the individual with a statement of cumulative percentage
- the individual notifies the pension company of their cumulative figure when making a withdrawal so the pension company can provide an updated cumulative figure
- there's no routine reporting from pension company to HMRC (though I'm guessing HMRC can access the pension company data through some statutory power)

The LTA has not been abolished yet and won't be until April 2024 at the earliest. But the legislation to do this has not gone through Parliament yet AFAIK.

It was the LTA tax charge which was abolished in April 2023. I'm not sure what the implications of this are but it would appear to be a bit of a mess.

https://www.ftadviser.com/pensions/2023 ... rom-april/

RockRabbit wrote:The LTA has not been abolished yet and won't be until April 2024 at the earliest. But the legislation to do this has not gone through Parliament yet AFAIK.

It was the LTA tax charge which was abolished in April 2023. I'm not sure what the implications of this are but it would appear to be a bit of a mess.

https://www.ftadviser.com/pensions/2023 ... rom-april/

Reducing the LTA tax charge (to 0%) required secondary legislation - that can be done almost immediately
Eliminating the LTA altogether requires primary legislation - that takes time, and in this case, "it takes time and some" because of the plate of spaghetti that is pensions legislation.

pochisoldi wrote:

RockRabbit wrote:The LTA has not been abolished yet and won't be until April 2024 at the earliest. But the legislation to do this has not gone through Parliament yet AFAIK.

It was the LTA tax charge which was abolished in April 2023. I'm not sure what the implications of this are but it would appear to be a bit of a mess.

https://www.ftadviser.com/pensions/2023 ... rom-april/

Reducing the LTA tax charge (to 0%) required secondary legislation - that can be done almost immediately
Eliminating the LTA altogether requires primary legislation - that takes time, and in this case, "it takes time and some" because of the plate of spaghetti that is pensions legislation.

I thought the delay was to allow the pension companies to change all their systems rather than a requirement for any further changes to primary legislation over and above that contained in The Finance (No. 2) Act 2023 ( which received Royal Assent on the 11th July 2023 ).

Draft legislation was published in July https://www.gov.uk/government/publicati ... -allowance

A revised policy paper was then issued a couple of weeks ago https://www.gov.uk/government/publicati ... owance-lta

I believe we're still awaiting the actual legislation that will need to be put before Parliament.

Note that although the LTA is being abolished, there will still be a ‘lump sum and death benefit allowance’ which is the old LTA value of £1,073,100 and transitional arrangements for anyone who has accessed their pension before April 2024. AJ Bell have issued a note explaining how these are expected to work although I'm still confused! https://www.ajbell.co.uk/articles/inves ... g-lifetime