Despite the ever changing pensions landscape, pension planning and saving for your retirement are still as vital as ever. Pensions still remain highly efficient, offering tax relief at your marginal rate of income tax on your contributions, assuming that anything over the basic rate of income tax is reclaimed via the individual's self-assessment tax return, and therefore are an important part of your overall planning.
- Tapered Annual Allowance With effect from 6 April 2016, the annual allowance of £40,000 per annum will potentially be reduced (tapered) for high earners. Prior to 6 April 2020, if you had total adjusted income in excess of £150,000 per annum, you would have seen your annual allowance reduced by £1 for each £2 this is exceeded, to a minimum of £10,000. With effect from 6 April 2020, tapering occurs where you have adjusted income in excess of £240,000 per annum, in which case you will see your annual allowance reduced by £1 for each £2 this is exceeded, to a minimum of £4,000. This is a very complex area and so it is vital that appropriate advice is sought.
- Carry Forward of unused reliefs You may be able to contribute in excess of current tax year's Annual Allowance of £40,000, or your tapered annual allowance if applicable, and potentially receive tax relief at up to 45% using Carry Forward. This would happen if you have contributed less than the Annual Allowance in the previous three tax years and were a member of a UK registered pension scheme during that time. As this is a potentially complex area, particularly where Defined Benefit schemes are concerned, advice should be sought.
- Lifetime Allowance The regular changes in the Lifetime Allowance mean that advice is more important than ever to ensure that you are optimising your retirement planning, and are fully availing of the latest Lifetime Allowance protection opportunities.
The value of a pension with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs depends on individual circumstances.