To ask Her Majesty's Government what assessment they have made of the implications of recent changes to the Lifetime Allowance for pension benefits for those in (1) the legal profession, (2) the medical profession, and (3) other professions; and of the case for reviewing those changes.
18 July 2019
Pensions tax relief is one of the most expensive reliefs in the personal tax system. In 2017/18 income tax and employer National Insurance Contributions relief cost over £50 billion, with around two-thirds going to higher and additional rate taxpayers. As confirmed at Autumn Budget 2017, from April 2018 the lifetime allowance will increase in line with CPI, in order that the value of this benefit is able to keep pace with inflation. This means from April 2019 the lifetime allowance has risen to £1,055,000.
The same tax rules must apply identically to everyone in the same situation, regardless of their employer.
However, across all public service workforces the Government looks at remuneration in the round and takes action when required to ensure delivery of world class public services. Where there is evidence that the delivery of services is being impacted, the Government takes appropriate action to address this, in line with our principles for pay and pensions policy. This is why we have introduced a temporary, taxable, Recruitment and Retention allowance for a small section of the judiciary, and will shortly bring forward a consultation on a new 50:50 pensions flexibility for senior clinicians in the NHS pension scheme.
All aspects of the tax system are kept under review and are subject to change through the annual Budget, in the context of the wider public finances. Any future changes to the tax system will be announced through this process.