Need Help with Your Pension
8 March 2010Wherever you are with your retirement provision, do not be swayed from considering action, it s not too late. There are still steps you can put into place to boost the pension amount you ll get when you retire.
Pensions are a very tax-efficient way to save. If you already have a pension, now would be a very good time to contact us about making a lump sum contribution to boost it, particularly as the end of tax yr is rapidly drawing near, or starting a SIPP to increase your choices. You won t have to draw all your pensions at the same time.
If you are self employed, you can contribute up to 100 per cent of the value of your relevant UK earnings (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax yr rising to 255,000 for the tax yr 2010/11. Contributions above this yearly amount are allowed but will be taxed. You can invest into any number of pension schemes (personal and/or company) each year.
You ll obtain tax relief on your Investment, so if you are a 40% 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% tax payers can obtain up to a further 20% 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 per cent for those earning more than 180,000. Wage Earners beneath 130,000 will not be affected.
There s a lifetime limit on the size of your pension pot, which is presently £1.75m in the tax year 2009/10 but rises to £1.8m for the 2010/11 tax year. If your investment fund passes this, you ll incur tax charges of 55 per cent if the extra gains are taken as a lump sum and 25 percent if taken as regular income. The income will then be subject to income tax at your highest rate.
From 6 April 2010, the age at which you can start drawing your pension increases to fifty five. If you need to, pension benefits can be deferred until you are up to 75 years old. You might still be able to take your pension before age 55 in certain circumstances, for example if you retire through ill-health.
Consilium Asset Management Ltd supply 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.
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