UK Pension Tax Changes Announced by the Government

On October 14th, the UK government announced that it will cut the annual tax pension allowance to £50,000, down from £250,000.

Even though the figure has been slashed 5 times and will significantly affect UK taxpayers who save for their pension, financial experts say that the situation is not as bad it could have been. According to the Treasury, the tax move will not have a dramatic effect on the society as it will only apply to 100,000 Brits, the annual salary of who amounts or exceeds £100,000.

According to financial experts, such as the Confederation of British Industry, PwC and CBI, the cut is not as bad as it could have been. Most people were concerned that the government will impose the cap on salaries of £30,000, which would affect pension schemes of 500,000 of UK workers.

Another change announced by HM Treasury affects the overall amount of tax-free pension savings, which is now reduced from £1.8 million to £1.5 million.

Let us remind that the government's initiative is aimed at raising £4 billion a year. The money is expected to be used to reduce the country's budget deficit.