As you may be aware, on Wednesday the Chancellor announced changes in the budget to the tapered annual allowance which affects very high earners.

The changes are effective from April 2020 and so will impact the tax year 2020/21 onwards but will not affect the current tax year (2019/20) for which Pensions Savings Statements will be sent out later this year to those exceeding the Annual Allowance.

From 6 April 2020 (i.e. for the 2020/21 tax year) the Threshold and Adjusted incomes will increase and the minimum tapered annual allowance a member can have will reduce as per the table below.

 

Threshold income

 £200,000

(increasing from £110,000)

Adjusted income

£240,000

(increasing from £150,000)

Minimum tapered annual allowance

£4,000

(reducing from £10,000)

 

For the LGPS, these changes pretty much remove consideration of the taper for the vast majority of members affected by the Annual Allowance tax charge, with only the very highest earners being affected by the taper from 2020/21 onwards.

For further information please read the HMRC note for members.