Osborne cuts pension tax relief to £40k and raises drawdown cap

The Chancellor has announced cuts to pensions tax relief, meaning individuals can now only put away £40,000 annually free of tax.

The decision to reduce the annual allowance by a further £10,000 comes only two years after Osborne slashed the allowance from £255,000 to £50,000. The government estimates today's annual allowance reduction to £40,000 will save the Treasury £600m a year. He also confirmed the lifetime allowance would be reduced from £1.5m to £1.25m. There had been some speculation that a deeper cut to £30,000 - which insurer Standard Life had said would save the Treasury £1.8bn - was also on the cards. The pensions industry has warned against further changes to the annual allowance. In their su...