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The LTA will be abolished from April 2024, but withdrawals in excess of the allowance next year will not suffer a charge – effectively the LTA rate will be set to 0%. This is to allow for the unravelling of the existing legislation with changes to be included in a subsequent Finance Bill.
This essentially removes the cap on lifetime savings, opening up the opportunity for further funding, even if the LTA had previously been fully used.
There will, however, be a cap on tax free cash at 25% of savings subject a maximum of £268,275 (25% of current LTA).
While the various forms of LTA protection will be redundant with regards to the LTA charge, they may still be relevant for determining tax free cash. Subject to certain conditions, anyone with a tax free cash entitlement in excess of £268,275 because of their LTA protection will retain their rights to this higher amount. They will also be able to restart pension funding from 6 April 2023, without losing their existing protection.
Those with scheme-specific tax free cash in excess of 25%, or with stand-alone lump sum rights, will also keep this entitlement.
Five Financial Wealth Management / Five Financial
is an Appointed Representative of
New Leaf Distribution Ltd.
New Leaf Distribution Ltd
is authorised and regulated
by the Financial Conduct Authority.
FCA number 460421.
Our services relate to certain investments whose prices are dependent on
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Investments and the income from them may go down as well as up and you may get back less than the amount invested.
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