On Mar. 14, UK Treasury issued regulations on abolition of allowance.
UK Treasury published the new Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (StIn 2024/356), that were laid before UKP on Mar. 14, 2024.
Section 14 of, and Schedule 9 of Finance Act 2004 (FA 2004) (c. 3) made provision for abolition of the lifetime allowance charge by s18 of Finance (No. 2) Act 2023 (c. 30).
Paragraph 41 of Schedule 9 to Finance Act 2024 (FA 2024) inserted new provisions into Chapter 15A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) (c. 1) as to pension commencement excess lump sum and its basis and its application.
The Regulations make consequential, transitional and saving provision connected with abolition of lifetime allowance charge and pension commencement excess lump sum.
Part 2 of the Regulations contains amendments to various parts of primary legislation.
These include amendments to the Tax Credits (Definition and Calculation of Income) Regulations 2002, and Income Tax (Pay As You Earn) Regulations 2003, as well as to the Registered Pension Schemes (Accounting and Assessment) Regulations 2005.
The regulations on Qualifying Overseas Pension Schemes and on Qualifying Recognized Overseas Pension Schemes and Corresponding Relief, were also amended, as was the text of the Registered Pension Schemes (Provision of Information) Regulations 2006.
The Registered Pension Schemes (Splitting of Schemes) Regulations 2006 and the Taxation of Pension Schemes (Transitional Provisions) Order 2006 were amended.
In addition, various amendments were made to the Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy etc.) Regulations 1997, to address requirements.
Effectiveness
These new regulations come into force on Apr. 6, 2024, and the amendments made by these regulations have effect for the tax year 2024-25 and all subsequent tax years.
Oct. 2024 Second Amendment
On Oct. 9, 2024, UK Treasury issued Pensions (abolition of lifetime allowance charge etc) (no. 2) regulations 2024 (StIn 2024/1012), which come into force Nov. 18, 2024.
Regulations modify primary and secondary legislation to make further consequential provision in connection with the removal of the lifetime allowance and the lifetime allowance charge by the Finance (no. 2) act 2023 (c. 30) and Finance act 2024 (c. 3).
Since the abolition of the lifetime allowance was announced, UK HMRC has worked with pension industry representatives to develop and test the legislation needed for the abolition to work as intended, across all aspects of the pensions tax regime.
As with previous related legislation, a draft of this instrument has been shared with industry representatives for a short informal consultation, 27 responses received.
The responses highlighted a few minor amendments, which have been addressed in the regulations; UK HMRC has not consulted directly with pension scheme members.
