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How What The Chancellor Said Last Week Could Save you £1000s
In last week’s budget, the Chancellor scrapped the Lifetime Allowance (LTA) and raised the Annual Allowance(AA) to £60K annually. Some have warmly welcomed the move, whilst others say it does nothing for the vast majority of those in society and how they save for their pensions. This blog post explores the LTA/AA and how these recent changes might affect you.
What is the LTA/AA?
The LTA and AA were introduced in 2006 and were a tax applied to Defined Contribution (DC) and Defined Benefit (DB) pensions. At this stage, if you don’t know what type of pension you have or the difference between DC and DB pension, then head across to the articles below before reading on:
/https://medium.com/@buildingout/what-type-of-pension-do-you-have-565e516206d1
When putting money into a pension, there are significant tax benefits. The money you put in has an automatic 20% uplift, and for those who are higher or additional rate, taxpayers can claim an additional 20–25% in their next year’s tax returns. Without any caps on this, those who are the wealthiest could benefit the most, taking advantage of the tax benefits and unlimited ability to put money away for the future.
