The Lifetime Allowance has been abolished and replaced
HM Revenue and Customs is changing the way pension payouts are taxed from today , in one of the largest changes to pension taxation in 20 years. Naturally, these changes are not simple, but there is some 'crucial advice' that could affect how much of your pension you keep or can pass on.
But the most exposed to taxation under the new system are those who stand to benefit from a pension left to them in someone's will, which is taxed on any amount over the LSDBA limit, which is £1,073,100. Anything over this limit will be taxed at a high rate and that limit is also further reduced by how many lump sum payments they took over the course of their retirement.
"The pension scheme will pay the benefits gross and the legal personal representatives need to report any excess to HMRC. It will then liaise with beneficiaries to collect any tax due at the end of the relevant tax year."
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