Wherever you are with your retirement objective, don’t be put off from considering action, it s not too late. There are still steps you can put into place to boost the pension amount you’ll receive when you finish working.
Pensions are a very tax-efficient way to invest. If you already have a pension, now would be a good time to contact us about making a lump sum contribution to improve it, especially as the close of tax year is quickly drawing near, or starting a self invested personal pension to widen your options. You will not have to take all your pensions at the same time.
If you’re self employed, you can contribute up to 100 per cent of the value of your relevant UK earnings (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax yr rising to 255,000 for the tax yr 2010/11. Contributions above this annual limit are allowed but will be taxed. You can contribute into any number of pension schemes (personal and/or company) each year.
You ll receive tax relief on your Investment, so if you are a forty percent tax payer a 20,000 investment would cost just 12,000. Basic rate tax relief is added by the government to all contributions at a rate of twenty%.
Forty% tax payers can claim up to a further twenty % tax relief via self assessment. If you earn more than 150,000 you will see the tax relief on your pensions cut from April 2011, tapering from 40 to 20 percent for those earning more than 180,000. Wage Earners below 130,000 will not be affected.
There s a lifetime limit on the amount of your pension savings, which is presently £1.75m in the tax yr 2009/10 but rises to £1.8m for the 2010/11 tax year. If your pot passes this, you ll incur tax charges of 55 percent if the excess benefits are taken as a lump sum and 25 per cent if taken as regular income. The income will then be subject to income tax at your highest rate.
From 6/4/10, the age at which you can start taking your pension rises to fifty five. If you need to, pension benefits can be deferred until you are up to 75 years old. You may still be able to take your pension before age fifty five in certain circumstances, for example if you retire through ill-health.
Consilium Asset Management Ltd supply advice on self invested personal pensions /sipps in South Gloucestershire.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.