The coalition Government has made a number of changes to the pension regime which could affect you and your business.
In October, they announced a change to the current contributions rules that mainly affect those earning over £130,000.
A flat contribution up to £50,000 will now receive full marginal tax relief and it will be possible to use unused allowances from the last three tax years.
The Government have also reduced the maximum value of a pension fund which retains the full tax favoured status from £1.8 million to £1.5 million.
After April 6th 2012, benefits valued in excess of this new lifetime allowance will be protected and it’s expected that some form of indexation of the protected value will be included.
In December, the Government also announced the changes that are designed to resolve the Post-75 retirement issues on which they had previously consulted.
The existing income drawdown rules are to be replaced on April 6th, which will replace both the existing Pre-75 and Post-75 rules.
Changes will affect the calculation of the maximum income available to you and there is a new concept of flexible drawdown being introduced which will allow greater access to funds for those individuals who have a secure income in excess of £20,000.
The main change for individuals is that, from April, it will be possible to pay lump sum death benefits beyond the age of 75, which means the wider family will be able to benefit from your pension fund if this is appropriate.
The Government have confirmed that there will be no tax charge on uncrystallised lump sum death benefit payments prior to age 75, however, a 55% tax charge will apply from April 2011 to all crystallised benefits and those that arise beyond the age of 75. Lump sum benefits paid to a charity will remain free of tax.
In normal circumstances there will be no Inheritance Tax liability on payments regardless of when death occurs, provided they are paid at the scheme administrator’s discretion.
We work in conjunction with a number of firms of Independent Financial Advisers and Accountants who are specialists in corporate pensions and if you require any further information as to how this may affect you, please contact us and we will advise you on the next steps.