Pension – Lifetime Allowance Changes!!

In March 31, 2016
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I hope everyone has had a Wonderful Easter Bank Holiday Break and managed to get outside and enjoy some of the Sunshine we had, in-between the heavy British down pours!!  I had a very busy but fun Weekend with my little boy and Niece, I am not sure who enjoyed the Easter Egg Hunts more, me or the Kids!!!

I just wanted to bring it to everyone’s attention of some of the added Pension changes that will come into force in April with regards to the Lifetime Allowance, please take your time to read the content below and of course, if you have any queries or concerns, please feel free to give us a call or send us an email, we will only be too pleased to help you with your queries.

pension pot

In April, the Government will reduce the lifetime allowance for pensions, which is the amount you can accumulate in pensions before any additional tax charges may apply when amounts over this limit are taken. The lifetime allowance will reduce from £1.25 million to £1 million. This is further to cuts already made that brought the lifetime allowance down from its 2010 high of £1.8 million.

While pension savings of more than £1 million sound like a large amount, if you have a final salary or defined benefit pension that is set to pay you over £40,000 a year in retirement, the calculations involved mean this is actually worth £1 million in terms of your lifetime allowance.  Also, if you have additional personal pensions, you could easily go over the limit.

The good news is that you don’t need to take any action to protect the higher lifetime allowance until you decide to take benefits. Therefore, if you have yet to draw on your pension benefits, and plan to do so after 5th April 2016, you will need to apply before you draw from any of your pensions so that you can be tested against the higher £1.25 million allowance. HMRC are planning to introduce an online application for this from July 2016.

 As mentioned before, if you have any questions regarding this or queries, please feel free to contact us! On a lighter note, I hope no one gets any April Fools pranks!

 

Disclaimer

Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. Past performance is not a guide to future performance. Tax rules can change at any time. 

Please remember your home or property may be repossessed if you do not keep up repayments on your mortgage.  We give clients the option to pay for mortgage advice by fee rather than commission. Equity Release refers to lifetime mortgages. To understand the features and risks, ask for a personalised illustration.

 The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto Enrolment, Tax Advice and Estate Planning.

 The opinions contained within this blog, do not constitute financial advice and no action should be taken based on this content alone.

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Redwood Financial Family Wealth & Estate Planners Ltd is Directly Authorised and regulated by the Financial Conduct Authority. FRN number 774469.

Disclaimers

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto-Enrolment, Tax Advice and Estate Planning. Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. https://register.fca.org.uk/

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Email: info@redwoodfinancial.co.uk

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Redwood Financial Family Wealth and Estate Planners Ltd Company Number: 08926661
Registered Office Address: Wellesley House, 204 London Road, Waterlooville, Hampshire,