The government has confirmed that further regulations around the abolition of the lifetime allowance (LTA) will be introduced “as soon as parliamentary time allows”.

Chancellor, Jeremy Hunt, previously announced plans to abolish the LTA in his 2023 Spring Budget, with the Finance Act 2024 delivering an amended pensions tax regime, effective from 6 April 2024, which replaced the LTA on most pension and lump sum benefits with two new allowances on most lump sum benefits.

However, industry experts warned at the time that this was a "rushed job with errors and omissions coming to light, resulting in HMRC having to now engage in a patch and mend job through regulations that are promised".

While HMRC had confirmed plans to share further technical changes through a second set of regulations "shortly", news of a summer election threw these plans into limbo.

Industry experts were quick to call on the new government to finish this work after the election, and, although the Labour Party previously suggested that it would look to reinstate the pensions LTA, reports emerged during the election that the party had dropped the proposal from its manifesto.

And HMRC’s latest Pension Schemes Newsletter confirmed that work is still ongoing to finish work to abolish the LTA, revealing that HMRC has now concluded the short informal consultation on the draft regulations to correct the legislation, with further regulation to follow.

“We have considered the feedback and regulations will be introduced as soon as parliamentary time allows,” it stated.

Industry experts have highlighted this as a sign that the LTA is less likely to make a return, with Standard Life retirement savings director, Mike Ambery, suggesting that "it seems less likely, but not certain, that the abolition of the LTA is here to stay".

"The LTA has been a hot potato over the last year or so," he stated. "Prior to last year's Budget, the allowance stood at just over £1m which sounds like a huge sum but in reality this was a figure that a growing number of people were reaching and which penalised people, particularly in the public sector, for diligent saving over many years.

"Ultimately, savers will be glad of clarity – it’s important that people retain confidence in the savings system and approach retirement planning with clarity.”

In addition to this, the newsletter provided an update on plans to move the LTA protection look-up service onto the managing pension schemes service.

This is expected to allow HMRC to provide additional information to registered pension scheme administrators and practitioners, when checking whether the protection that a member has informed them they are relying on, for a higher lump sum, is valid.

As part of this work, HMRC confirmed that it is now looking for scheme administrators and practitioners to help develop this feature, calling on those interested to sign up to a user research Managing pension schemes user panel.

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