Advice about Pensions
Wherever you are with your retirement objective, do not be put off from taking action, it s not too late. There are still steps you can take to increase the money you ll get when you retire.
Pensions are a highly tax-efficient way to invest. If you already have a pension, now would be a very good time to talk to us about making a lump sum contribution to boost it, especially as the close of tax yr is rapidly emerging, or starting a SIPP to improve your options. You won t have to draw all your pensions at the same time.
If you are self employed, you can contribute up to 100 % of the value of your relevant UK salary (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax year rising to 255,000 for the tax year 2010/11. Investments above this yearly limit are allowed but will be taxed. You can invest into any no. of pension schemes (personal and/or company) each year.
You will obtain tax relief on your Investments, so if you are a forty % tax payer a 20,000 investment would cost just 12,000. Basic rate tax relief is supplied by the government to all contributions at a rate of twenty percent.
Forty percent tax payers can claim up to a further twenty % tax relief via their tax return. If you earn more than 150,000 you will see the tax relief on your pensions cut from April 2011, tapering from 40 to 20 percent for those earning more than 180,000. Earners beneath 130,000 will not be affected.
There s a lifetime limit on the amount of your pension savings, which is currently £1.75m in the tax year 2009/10 but rises to £1.8m for the 2010/11 tax year. If your pot exceeds this, you ll incur tax charges of 55 percent if the surplus gains are taken as a lump sum and 25 per cent if taken as income. The income will then be subject to income tax at your highest rate.
From 6th April 2010, the age at which you can start drawing your pension rises to 55. If you need to, pension benefits can be deferred until you are up to 75 years old. You may still be able to take your pension before age fifty five in some circumstances, for example if you retire through ill-health.
Consilium Asset Management Ltd provide pension advice and retirement planning advice.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.
