Showing posts with label tax relief. Show all posts
Showing posts with label tax relief. Show all posts
Monday, 18 August 2014
HMRC Pensions Individual Protection application/ Now available
As an update from the last tax year (2013/2014), we note that the HMRC website has been updated today and now includes full details of the new Individual Protection for pensions, along with a facility to apply for this online.
This application can be found here: http://www.hmrc.gov.uk/pensionschemes/ip14online.htm
Chapters Financial is not responsible for the content of external webpages.
As a reminder, the HMRC website confirms:
Individual Protection 2014
The government announced that individual protection 2014 will be available when the lifetime allowance is reduced to £1.25 million for 2014-15. Individual protection 2014 will operate from 6 April 2014, for those with pension savings valued at over £1.25 million on 5 April 2014.
Individual protection 2014 will give a protected lifetime allowance equal to the value of your pension rights on 5 April 2014 - up to an overall maximum of £1.5 million. You will not lose individual protection 2014 by making further savings in to your pension scheme but any pension savings in excess of your protected lifetime allowance will be subject to a lifetime allowance charge.
You'll be able to apply for individual protection 2014 from 18 August 2014. Your application must be received by HMRC no later than 5 April 2017.
You can hold both fixed protection 2014 and individual protection 2014.You can also hold individual protection while holding either enhanced protection or fixed protection but you can't apply for individual protection if you already hold primary protection.
Summary
Pensions and HMRC protection can be a complicated subject, dependent on your individual circumstances. If you would like to consider the points noted above further then please do not hesitate to contact the team at Chapters Financial, who will be able to help you further with your pension enquiries. No individual advice is provided during the course of this blog. If you would like to receive further information regarding your own individual situation and circumstances, please contact the Chapters Financial team in either Guildford or Woking.
Keith Churchouse BA Hons FPFS
Director, Chapters Financial Limited
Chartered Financial Planner
Certified Financial Planner
ISO22222 Personal Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.
Thursday, 1 May 2014
Are Annuities dead? Take Financial Planning advice first
I read recently from some actuarial tables that a male and female aged 65 in reasonable health could expect to live for around another 25 years or so. It is interesting to note that the differential between men and women (a while ago women would be expected to live for around 3 years longer than a man) has reduced to around a year’s difference. We never know when we will finally meet our maker, however making your money stretch far enough to ensure you enjoy the years of your autumn is paramount.
A possible quarter of a century in retirement is a long time and with the State Pension being equalised in the tax year 2016/2017 at approximately £145.00 a week (£7,540 pa /paid gross but taxable), this amount may well be the minimum you require to make ends meet. (Current level £113.10 maximum 2014/2015). There are some expectations that we will retire later and this has been partly factored into the rise in the State Pension Age in coming years (increasing to 68 between 2024-2026). The minimum age to which you can draw your pension benefits is also increasing to age 57 from 2028. All because we are living longer.
There is also greater knowledge of the need to provide for the costs of Long Term Care and this cannot, and should not, be ignored. You can see that the pressure is on to get these vital retirement income decisions right.
The new flexibility announced in the Budget 2014 was welcome news for many, the main changes occurring in April 2015. Sure, there is going to be a few who blow their pension pots (after paying income tax at their highest marginal rate) on fast cars and holidays, claiming destitution thereafter. You can see the headlines already! However, there are also those that will see the need for an annuity purchase from some or all of their accumulated pension funds to provide them with the future security they desire in their lengthy retirement. This certainty of income offers great security for some, preferring to avoid the volatility of investment markets with their funds. Do I think annuities are dead? Not for some.
Of course, the new flexible Income Drawdown arrangements will become popular, with the option of releasing tax free cash to spend as you will. Thereafter, careful financial planning needs to be undertaken to meet your current needs, taking into account the likely reality that the decisions being made at retirement will be felt for 20+ years ahead. Getting it wrong at the outset could see some returning to work to make ends meet.
HM Treasury have issued a paper called 'Freedom and choice in pensions' on the 19th March 2014 and this goes into great detail on the proposed changes here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/294795/freedom_and_choice_in_pensions_web_210314.pdf
Chapters Financial is not responsible for the content of external websites.
This might appear to be scaremongering, however, many may regret the flexibility introduced and we recommend caution and careful planning to make sure that your pension funds last as long as you do.
No individual advice is provided during the course of this Blog. Speak to the team at Chapters Financial Limited in Guildford or Woking to address your individual needs for what should be the best part of your life....retirement!
Keith Churchouse FPFS, B A Hons
Chartered Financial Planner
Certified Financial Planner
ISO 222222 Personal Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, Number 402899.
A possible quarter of a century in retirement is a long time and with the State Pension being equalised in the tax year 2016/2017 at approximately £145.00 a week (£7,540 pa /paid gross but taxable), this amount may well be the minimum you require to make ends meet. (Current level £113.10 maximum 2014/2015). There are some expectations that we will retire later and this has been partly factored into the rise in the State Pension Age in coming years (increasing to 68 between 2024-2026). The minimum age to which you can draw your pension benefits is also increasing to age 57 from 2028. All because we are living longer.
There is also greater knowledge of the need to provide for the costs of Long Term Care and this cannot, and should not, be ignored. You can see that the pressure is on to get these vital retirement income decisions right.
The new flexibility announced in the Budget 2014 was welcome news for many, the main changes occurring in April 2015. Sure, there is going to be a few who blow their pension pots (after paying income tax at their highest marginal rate) on fast cars and holidays, claiming destitution thereafter. You can see the headlines already! However, there are also those that will see the need for an annuity purchase from some or all of their accumulated pension funds to provide them with the future security they desire in their lengthy retirement. This certainty of income offers great security for some, preferring to avoid the volatility of investment markets with their funds. Do I think annuities are dead? Not for some.
Of course, the new flexible Income Drawdown arrangements will become popular, with the option of releasing tax free cash to spend as you will. Thereafter, careful financial planning needs to be undertaken to meet your current needs, taking into account the likely reality that the decisions being made at retirement will be felt for 20+ years ahead. Getting it wrong at the outset could see some returning to work to make ends meet.
HM Treasury have issued a paper called 'Freedom and choice in pensions' on the 19th March 2014 and this goes into great detail on the proposed changes here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/294795/freedom_and_choice_in_pensions_web_210314.pdf
Chapters Financial is not responsible for the content of external websites.
This might appear to be scaremongering, however, many may regret the flexibility introduced and we recommend caution and careful planning to make sure that your pension funds last as long as you do.
No individual advice is provided during the course of this Blog. Speak to the team at Chapters Financial Limited in Guildford or Woking to address your individual needs for what should be the best part of your life....retirement!
Keith Churchouse FPFS, B A Hons
Chartered Financial Planner
Certified Financial Planner
ISO 222222 Personal Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, Number 402899.
Monday, 10 December 2012
Saving across the generations/ Children's pensions
George Osborne's Autumn Statement at the beginning of December 2012 bought into sharp focus the way pension contributions have be made, the falling limits of future contribution levels and also the maximum levels of pension 'pots' that can be accrued before penal tax charges would be applied.
This last point noted refers to the pension 'Lifetime Allowance' (or LTA for short) currently standing at £1.5m of total pension value (already fallen from £1.8m), to a new proposed level of £1.25m in the tax year 2014/2015. As an example, benefits that are crystallised in this tax year at a greater value than £1.5m (without existing protection arrangements) could see the balance taxed at a level of up to 55%.
Based on recent economic times, many people in their middle years only dream of having a total pension pot value of £1.5 or £1.25m at retirement. And it is this point that I have received the most client comment, referring to their own situations of probably 'only' achieving a total pension value of 'say' half this LTA value, and then promptly referring to their children who they fear may not even get close to half their parents half.
This has prompted me to remind various clients that they can start pensions for their children at very young ages and put money away into this for their futures. The contribution would normally be limited to a maximum gross contribution of £3,600 in a tax year, with basic rate tax relief bringing this down to a net contribution of £2,880 for the year. Conveniently, this net amount could also fall outside the donor’s estate for inheritance tax purposes as a gift using the annual gift allowance of (currently) £3,000 per annum.
The pension contributions made for the child and the tax relief, which the insurer will reclaim from the Revenue, are invested in a fund which grows in a tax efficient manner.
It is important that you are aware that the value of the pension as well as any income which they generate can fall as well as rise and that past performance is not a guarantee of the future. If you surrender the contract, especially during the early years, you may get back less than you have invested.
In my opinion, the main factor is not the contribution level, but the duration of time for investment that may have the biggest impact. With the minimum age that pension benefits can be drawn now increased to age 55, a child aged 10 has at least 45 years (currently) before they could draw pension benefits. It is this accumulation time that is likely to see significant value being accrued for a child's future use and benefit.
No individual advice has been provided in the content of this blog, and if you would like to consider this opportunity, then please let us know at our office in Guildford. As you can see, saving in a tax efficient way across the generations is something many parents are considering, fuelled by their concerns for their offspring’s financial futures.
Keith Churchouse FPFS
Director
Chartered Financial Planner
ISO 22222 Certified Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number 402899.
This last point noted refers to the pension 'Lifetime Allowance' (or LTA for short) currently standing at £1.5m of total pension value (already fallen from £1.8m), to a new proposed level of £1.25m in the tax year 2014/2015. As an example, benefits that are crystallised in this tax year at a greater value than £1.5m (without existing protection arrangements) could see the balance taxed at a level of up to 55%.
Based on recent economic times, many people in their middle years only dream of having a total pension pot value of £1.5 or £1.25m at retirement. And it is this point that I have received the most client comment, referring to their own situations of probably 'only' achieving a total pension value of 'say' half this LTA value, and then promptly referring to their children who they fear may not even get close to half their parents half.
This has prompted me to remind various clients that they can start pensions for their children at very young ages and put money away into this for their futures. The contribution would normally be limited to a maximum gross contribution of £3,600 in a tax year, with basic rate tax relief bringing this down to a net contribution of £2,880 for the year. Conveniently, this net amount could also fall outside the donor’s estate for inheritance tax purposes as a gift using the annual gift allowance of (currently) £3,000 per annum.
The pension contributions made for the child and the tax relief, which the insurer will reclaim from the Revenue, are invested in a fund which grows in a tax efficient manner.
It is important that you are aware that the value of the pension as well as any income which they generate can fall as well as rise and that past performance is not a guarantee of the future. If you surrender the contract, especially during the early years, you may get back less than you have invested.
In my opinion, the main factor is not the contribution level, but the duration of time for investment that may have the biggest impact. With the minimum age that pension benefits can be drawn now increased to age 55, a child aged 10 has at least 45 years (currently) before they could draw pension benefits. It is this accumulation time that is likely to see significant value being accrued for a child's future use and benefit.
No individual advice has been provided in the content of this blog, and if you would like to consider this opportunity, then please let us know at our office in Guildford. As you can see, saving in a tax efficient way across the generations is something many parents are considering, fuelled by their concerns for their offspring’s financial futures.
Keith Churchouse FPFS
Director
Chartered Financial Planner
ISO 22222 Certified Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number 402899.
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