Changes to the lifetime allowance and tapered annual allowance – are you affected?
Your pension planning could be affected if you’re a higher or middle income earner – you should take action now
These latest pension changes relate primarily to the lifetime allowance and tapered annual allowance.
From April 2016 the annual allowance that attracts pension tax relief was tapered. It affects anyone with an ‘adjusted income’ of £150,000 or more, and a threshold income of more than £110,000. And ‘adjusted income’ is more than just your salary, it includes employee and employer pension contributions, benefits in kind, such as Private Medical Insurance, savings, bonuses or commission, pension income and savings and investment income, and buy-to-let income. Threshold income is all income as mentioned but excluding all pension contributions. Read our guide for more help and information.
The lifetime annual pension allowance is capped at £1 million. Anything more in your pot and you could be liable for up to 55% tax when you take any money out. Even more alarming; if you were to die, potentially, the proceeds of any death-in-service life assurance would count towards the £1 million. We’ve worked out that anyone earning circa £80,000 per annum could be impacted.
Find out if you may be affected, read our guide ‘Don’t lose out on your pension pot’, to help you understand the pension changes and the impact they may have on you and your family. We will also explain what you should be thinking about now to help protect you and your family from the effect of these changes.
If you believe you may be affected, contact us today to talk to one of our qualified financial advisers.