April
2010
Talking Pensions
Wherever you are with your retirement savings, do not be swayed from considering action, it s not too late. There are however 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 good time to contact us about making a single premium contribution to improve it, especially as the end of tax yr is speedily approaching, or starting a SIPP to widen your choices. You won’t have to draw all your pensions at the same time.
If you’re self employed, you can contribute up to 100 % of the value of your relevant UK earnings (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax year rising to 255,000 for the tax yr 2010/11. Contributions above this annual amount are granted but will be taxed. You can contribute into any no. of pension schemes (personal and/or company) each year.
You will get tax relief on your Investments, so if you are a 40% tax payer a 20,000 contribution would cost just 12,000. Basic rate tax relief is added 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 making more than 180,000. Earners below 130,000 will not be impacted.
There s a lifetime limit on the amount of your pension savings, which is presently £1.75m in the tax yr 2009/10 but rises to £1.8m for the 2010/11 tax year. If your investment fund exceeds this, you ll incur tax charges of 55 % if the extra benefits 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 6/4/10, the age at which you can start taking 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 supply advice on self invested personal pensions /sipps in South Gloucestershire.
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.
