Tax advice of the week: A hidden gem for retirees
If you have an occupational pension scheme, here's some good news you may have missed from this year's budget changes.
Thousands of employees with occupational pension schemes may be able to "claim a bigger tax-free lump sum on retirement", says Jessica Bown in The Sunday Times. Skandia, the pension provider, claims to have found a "hidden gem" in amongst "the technical papers issued by HMRC on the back of the budget changes".
Since A-Day (6 April 2006), the level of tax-free cash available to members of such schemes has been set at a maximum of 25% of the value of their fund.
Pre A-Day members of occupational schemes, however, were allowed to protect the tax-free cash rights they held at A-Day that were greater than 25%. It is in these cases that the tax-free entitlement can increase further.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Perhaps the best news is that the protected entitlement is automatically increased by the 20% increase in the Lifetime Allowance up to 6 April 2012 (it went up from £1.5m to £1.8m), regardless of how well the fund has performed since. Secondly, it is increased by 25% of any positive growth in the fund since A-Day.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?
Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
By Kalpana Fitzpatrick Published
-
What does Rachel Reeves’s plan for growth mean for UK investors?
Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
By Katie Williams Published