New restriction for those in pension drawdown10th November 2017 | Posted in: Pensions, Savings & Investments, Personal Tax, Planning
One of the measures affecting pensions announced in the Spring 2017 Budget concerns a new £4,000 pension input limit for those who are drawing income from their money purchase pension fund.
The new flexible drawdown rules introduced from 6 April 2015 have allowed those with money purchase schemes such as Self Invested Personal Pension schemes (SIPPs) to draw as much or as little as they wish each year. Other than the 25% tax free lump sum, the amounts withdrawn are taxed as income on the Individual. The new £4,000 (previously £10,000) annual limit in the latest Finance Bill is intended to be an anti-avoidance measure to deter pension “recycling” where the amounts withdrawn are reinvested in the pension scheme to obtain further tax relief.
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