Pensions – there’s good news!

9th April 2019

Many commentators had predicted that the Chancellor would announce major changes to pension tax relief in his 2018 Autumn Budget. However, this wasn’t the case. Other than the raising of the Lifetime Allowance in line with the Consumer Prices Index to £1,055,000 for the 2019-20 tax year, the rules surrounding pensions remain the same.

Valuable tax relief

Pensions continue to offer generous tax breaks to encourage us all to provide adequately for our retirement years. If you make contributions to a pension, or if your employer deducts your payments from your salary, you automatically get 20% tax relief as an additional deposit into your pension pot. If you are a higher-rate taxpayer, you can claim an extra 20%, while those paying additional-rate tax can claim back an extra 25%. From age 55, you can take 25% of your savings as a tax-free lump sum. There are different ways of doing this, including taking the tax-free cash only, taking part of the tax-free cash, taking a lump sum including the tax-free element and taking the whole pension fund including the taxfree cash.

Plans to suit your needs

Ideally, everyone would start to save for their pension as soon as they start work, however even if you only have a few working years left, you can still start a pension. Pension plans come in various forms to suit the needs of different types of worker, from the basic state pension to self-invested personal pensions (SIPPs), personal or private pensions, and workplace pensions schemes, to name but a few. The sooner you start your pension, the longer your money will have to grow.

If you’re self-employed, an employee, work part-time, run your own business or have accumulated pension pots with past employers, we can offer you the advice you need. If you haven’t looked at your pension plan recently, then arrange to see us for a review.