Spring time is nigh: the clocks will be bounding forwards, and as I write, along with the Budget, a new tax year is nearly upon us. Oh what joy! Not only will we have to suffer the usual increases in direct taxation, but any other little surprises that the Chancellor has for us. By the time this illustrious periodical hits the letterboxes of West Hill, we will probably know our fates.

There are always pre-budget rumours, of loopholes to be closed, reliefs to be removed, and tax advantages to be, er, ‘disadvantaged’. These regular visitors include: the removal of higher-rate tax relief on pension contributions, the cessation of the ability to take 5% tax-deferred income from Life Assurance Investment Bonds, and the introduction of a lifetime cap on ISA funds, to name but three. There is also plenty of discussion, regarding the mooted mansion tax, but this is unlikely to bother most of us, even if it does materialise. Inevitably, whatever has been handed out to us, we will just have to live with it!

As for the changes due on 6 April, the part of pensions known as the ‘Protected Rights’ element disappears, and as a result there will no longer be a requirement to have mandatory spouses pension on annuity payments from them. If you are looking to take an annuity from a pension that was derived from contracting out of the State Earnings Related Pension Scheme, or from certain occupational pensions, then if your circumstances are right, you might be able to access better rates, on a single life basis. For those lucky enough to have large pension pots, or are likely to have, the lifetime allowance for pension holdings reduces to £1.5m. There is a strong need for advice, as there are steps that must be taken, quickly, in order to protect your future funds, if they are over the allowance, or there is a likelihood of being so at retirement. The small fund commutation (also known as ‘triviality’) limit remains at £18,000 and does not reduce down in line with the lifetime allowance, and there will be new rules regarding occupational pension funds below £2,000 in value.

Casting our minds forward to October, we will see the start of compulsory Auto Enrolment in a qualifying pension arrangement for some employees. Employers ought to note that they should take advice, to ensure they comply with the regulations, when the time comes for their business to fall into the net. There will be strict penalties for non-compliance. By 21 December, the EU Gender Directive will be in force, and it is anticipated that annuity rates will worsen for males, as expected, but also will worsen, rather than getting better, for females. This directive will also affect any insurance that is currently rated by gender, and may necessitate your reviewing all such insurances, to make sure you are getting the best rates. It may be a “buy now while stocks last” scenario for those thinking of arranging such cover. All personal protection insurances are expected to increase to some degree.

On that cheery note, I’ll bid you all farewell, until the balmy days of May.

David Foot

Of course, since David wrote that piece pre-Budget, we now know what happened…