Tax Relief on Pensions and the Chancellor
Pearson’s Financial Advisers are keeping a watchful eye on an anticipated announcement soon regarding the overhaul of pension tax relief.
Chancellor George Osborne will announce the outcome of a pension tax relief review on 16 March. While he hasn’t confirmed what, if anything, will change, The Financial Times and other reputable sources are reporting he's planning a flat-rate 'savings incentive' of between 25% and 33% for everyone.
If correct, higher-rate and additional-rate taxpayers are expected to lose a benefit worth up to £8,000 a year and are being urged to consider bringing forward any planned pension contributions in case the shutters are brought down.
Basic-rate and non-taxpayers may wish to consider delaying any planned contributions for a few weeks in case any changes take effect immediately.
Commenting on the expected changes, Financial Services partner, Richard Eastwood said: “Hardly a single day goes by where we don’t have clients asking “Is a pension is any good?” Such is the perceived complexity around pensions that a lot of people just place their annual statement in a cabinet draw never to read again! If you had the cash equivalent in the sideboard I am pretty sure you would be keen to get that money working for you.
• So firstly if you have a pension I would recommend you get to grips with exactly what it is worth and what it will entitle you too.
• Not only do most people not know how their pension is taxed, most don’t even know how it is invested and of course this can make a huge difference to your final income in retirement.
• Lastly would, a single rate of ‘savings incentive’ as George is suggesting benefit people?
“The review is due on the 16th of March and if you need advice on getting your well-earned tax relief I would urge you to get in touch.”
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
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