Stand-out Q – changes to PIP…
Our Technical Hub provides access to a wide range of pension tax and trust technical resources. Every now and then we post tweets covering stand out questions from our technical content and our answers in case others might also find them helpful. As Twitter’s character restrictions only allow for the bare bones of the Q&A we link to the details here, too.
My clients have arrangements where the pension input periods (PIP) were opened before the Budget announcement on 8 July 2015. What did the changes mean for them?
In order to facilitate the introduction of the tapered annual allowance, PIPs are aligned with the tax year from 2016/17 with transitional measures covering 2015/16 to protect individuals who might have been disadvantaged by the alignment.
All PIPs open on 8 July 2015 closed on that date and the next PIP ran from 9 July 2015 to 5 April 2016. All subsequent PIPs are aligned with tax years. There will no longer be the option to vary a PIP.
Under the transitional measures, individuals had an annual allowance of £80,000 for the period 6 April 2015 to 8 July 2015 and where this amount was not fully used the balance was carried forward, subject to a maximum of £40,000, into the period 9 July 2015 to 5 April 2016. Any unused annual allowance from this latter period can be added to unused annual allowance from the 2016/17 and 2017/18 tax years, not forgetting to factor in the impact of the tapered annual allowance if appropriate in either or both of these year, to determine the total amount of carry forward to 2018/19.
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