Pensions Taxation
One of the main changes introduced by the Act was a change in the taxation of UK pensions from 6 April 2006. Prior to the change many different taxation regimes applied to pension schemes depending on the type of scheme. The changes introduced a single taxation regime.
The principle of the new regime is that a pension fund will be tax-free provided it is below the life time allowance (which was set at £1.5m for the year from 6 April 2006). A second restriction was imposed limiting the maximum annual contribution into a pension scheme.
Although the new regime is simpler, the need to provide transitional arrangements for pension scheme members whose existing entitlements exceed the new limits resulted in the actual implementation being extremely complex.
Read more about this topic: Finance Act 2004
Famous quotes containing the words pensions and/or taxation:
“Many old people receive pensions for no other reason, it seems to me, but as a compensation for having lived a long time ago.”
—Henry David Thoreau (1817–1862)
“Every diminution of the public burdens arising from taxation gives to individual enterprise increased power and furnishes to all the members of our happy confederacy new motives for patriotic affection and support.”
—Andrew Jackson (1767–1845)