New regulations address errors in Finance Act but not yet ‘job done’ for HMRC when it comes to legislating for the new tax regime – LCP
Pensions & benefits Pensions tax
HMRC have published promised regulations relating to the errors and omissions in the pensions schedule to the Finance Act 2024. The Finance Act 2024 delivers an amended pensions tax regime from 6 April 2024 in which a Lifetime Allowance on most pension and lump sum benefits is replaced by two new allowances on most lump sum benefits.
David Everett, Head of Pensions Research at LCP, commented: “These important, but highly technical, regulations have been necessary as errors and omissions have been discovered in the recently enacted Finance Act 2024. The regulations seem to address nearly all of the promised changes highlighted in various HMRC newsletters since December 2023 and as such are very welcome.
“Scheme administrators, in particular, will need to take note of some of the changes made by these regulations. These include which lump sums and lump sum death benefits will need to be newly reported to HMRC, and how the new lump sum allowances are established for those who have started to take benefits before 6 April 2024.
“Unfortunately, this is unlikely to be ‘job done’ for HMRC when it comes to legislating for this modified pension tax regime. We are aware of other changes that will need to be made to the new law, and trust that HMRC will tackle them in a timely manner.”