New changes to the lifetime allowances for pension savings could prove costly to barristers with substantial pension pots unless they take action now. Milsted Langdon inBath,Bristol,Tauntonand Yeovil can provide expert advice to assist barristers in protecting pension savings.
From 6 April 2014, the lifetime allowance – the amount someone can put into their pension arrangements and receive tax relief on the savings – will be reduced to £1.25 million from £1.5 million.
Unless the pension saver puts in place some form of lifetime allowance protection, if their pension savings are worth more than £1.25 million when they take their benefits, they will have to pay the lifetime allowance tax charge on the excess, at a rate of 55 per cent on a lump sum and 25 per cent if taken as a pension.
HMRC is offering barristers, and others, affected by the changes the opportunity to apply for fixed protection 2014 for their lifetime allowance, but they must do so before 6 April 2014.
Fixed protection 2014 will protect people with pension pots worth more than £1.25m but no more than £1.5 million. Other eligibility rules will also apply.
Milsted Langdon can provide expert guidance on applying for fixed protection 2014 and also advise on whether you may also need to apply for individual protection 2014.
Details of individual protection 2014, for which the application process is due to open on 6 April 2014, will be confirmed later. However, it is expected that it will give a lifetime allowance equal to the value of pension rights on 5 April 2014 – up to an overall maximum of £1.5 million – and will not be affected by further savings into a pension scheme. Pension savings in excess of the lifetime allowance will be subject to the lifetime allowance charge.
For more information on protecting your pensions lifetime allowance, please contact us.