Tax relief rule reversal

The Government has confirmed it will cut the amount people who have already accessed their pension can save each year into a pension plan in a move that was expected to be dropped or delayed as a result of the snap election.

Chancellor Phillip Hammond had proposed a cut to the annual pensions savings limit from £10,000 to £4,000 a year for those who have already made use of the “pension freedoms”.

His reason was to restrict tax relief available to older savers and to prevent “re-cycling” – where people take money out of pensions and then re-invest it again in order to obtain tax relief.

The move was dropped as the Government rushed to pass the Finance Bill ahead of the general election, however, Government officials announced this week that the cut would be re-instated and be retrospective from April this year.