We have reproduced two of the more surprising changes announced in the Budget notes published immediately following George Osborne’s presentation last week.
- HMRC to be given powers to raid bank accounts:
“The government will modernise and strengthen HMRC’s debt collection powers to recover financial assets from the bank accounts of debtors who owe over £1,000 of tax or tax credit debts, have the financial means to pay, and have been contacted multiple times by HMRC to pay. A minimum of £5,000 will be left across debtors’ accounts. This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual’s account, such as France and the US.”
We hope that this does not include rights to recover unpaid tax on estimated assessments!
- A number of relaxations were announced that are intended to give tax-payers more control over their “pension pots”.
- Increased Pension Flexibility – The government will legislate to allow those with a defined contribution pension to draw down after age 55- from April 2015, subject to their marginal rate of income tax.
- Financial guidance – The government will ensure that, from April 2015, all individuals with defined contribution pension pots are offered free and impartial face-to-face guidance at the point of retirement and will make available up to £20 million in the next 2 years to develop this initiative.
- Capped drawdown – From 27 March 2014, the government will allow people with defined contribution pension wealth more flexibility to access their savings by increasing the capped drawdown limit to 150% of an equivalent annuity.
- Minimum income requirement change – From 27 March 2014, the government will allow people with defined contribution pension wealth more flexibility to access their savings by reducing the minimum income requirement for accessing flexible drawdown to £12,000, subject to their pension scheme rules.
- Small pension pots – From 27 March 2014, the government will increase the amount for small individual pension pots that can be taken as a lump sum regardless of total pension wealth from £2,000 to £10,000.
- Increase the number of small pots that can be taken as lump sums – The government will increase the number of small pension pots that can be taken as lump sums from 2 to 3.
- Trivial commutation (small pension wealth) – From 27 March 2014, the government will allow people with defined contribution pension wealth more flexibility to access their savings by increasing the total pension wealth that people can have before they are no longer entitled to receive lump sums under trivial commutation rules to £30,000.
Clearly, these amount to significant changes in the way in which we can access our pension savings at retirement. Readers who are approaching pensionable age should consider their options carefully, and should certainly seek tax advice.