Pension funds – the lifetime allowance

Do you have a reasonably large pension fund, if so you need to be aware that the tax rules on pensions have altered.

On 6 April 2012, the lifetime allowance (LTA) will be reduced from £1.8 million to £1.5 million.

Any pension benefits in excess of this amount will be taxed at 55% if drawn as a lump sum or 25% if drawn as a taxable income.

Individuals can opt to protect their LTA at £1.8 million by applying for fixed protection on form APSS227 if they apply to HMRC by 5 April 2012.

However, no further benefit accrual is allowed and a new arrangement cannot be started (unless to just accept a pension transfer), otherwise fixed protection will be lost.

Fixed protection is not available for those with primary or enhanced protection.

Do you have any queries on your pension – if so do get in touch with one of our Financial Planning Consultants, at Pareto Lawrence we offer both Financial and tax planning advice to corporate and private clients.

This entry was posted in Personal Financial Advice and tagged , , , , .

Leave a Reply