Pension funds – the lifetime allowance

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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.

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