From 6th April 2016, the Lifetime Allowance for pensions will reduce from £1.25m to £1m. This may still sound like a very generous allowance but it can be surprisingly easy to breach.
So what exactly is the Lifetime Allowance (LTA)? In essence, it caps the amount you can withdraw from pension funds without triggering an extra tax charge. Any pension funds above this amount will be subject to a Lifetime Allowance Charge.
If the value of your funds within all your pension arrangements exceed £1m, then you will have to stop contributing; and you will need to apply for Fixed or Individual Protection. Or face a 55% tax charge on any access!
Contact us if this is your situation, so we can help.