This is worth reading – It could save you £137,500 in tax by filling in a form.
All you need is the potential to have £1.25 million in your pension fund by the time you retire
Pension Lifetime Allowance
The lifetime allowance limits the amount of savings that can be built up in the tax-advantaged pension environment. The current limit is £1,250,000. However, this will be reduced to £1,000,000 from 6th April 2016. Although, the figure may still appear very high, a significant number of individuals will be affected by this change, particularly members of generous company pension schemes.
If your total pension pot (including the value any final salary entitlement) is in excess of the pension lifetime allowance at the time you draw your benefits, there is a 55% tax charge on the excess if you take this as a lump sum or a 25% tax charge if you take this as an income plus your marginal rate of income tax.
If you feel your combined pension savings are in excess of £1,000,000 or will be by the time you plan to retire, it would be advisable to review your pension plans to check if either Fixed Protection 2016 or Individual Protection 2016 would be suitable. This can allow you to maintain a higher lifetime allowance (above £1,000,000) and could potentially save you up to £137,500 in tax. I would suggest this is done well before the end of the current tax year so that you can meet the likely deadlines to apply for the protection and provide sufficient time for the pension companies to send you the required information.
As there are wider considerations and technicalities when applying for Fixed or Individual Protection,
By all means give Andy a call on this or other financial matters. You can contact Andy Wray of DGS Independent Financial Advisers on 01727 514444 or 07901 858553 or at aw@dgsifa.com
Leave a Reply