HOW YOU CAN SAVE TAX ON A LARGE PENSION
Are you totally fed up with ever increasing taxes on pensions after the sacrifices you have made to build a large pension? You’ve worked hard for years, you’ve built a fund worth more than £500K, you’ve sacrificed salary in order to grow your pension more and now you are faced with penal tax charges when you start drawing your pension benefits! If that’s how you feel then join the club.
If you feel like the proverbial fly caught in a venus fly trap don’t despair. There are numerous ways to either minimize or eliminate the impact of the tax on large pensions known as the Lifetime Allowance (LTA). We have been successfully advising clients on ways to minimise the effects of the LTA tax charge for a number of years. One little known solution is an offshore pension known as QROPS which stands for Qualifying Registered Overseas Pension Scheme.
There are a number of surprising advantages of such pensions the main one of which is no Lifetime Allowance charge! As the LTA tax charge is 55% on the excess above £1 million when you start withdrawing your pension benefits increasing numbers of people are getting caught by this tax charge. Many of these victims are members of final salary pension schemes who do not realise how valuable their pensions really are particularly if they also have private pensions which are generally known as money purchase pensions.
QROPS have other tax advantages such as a maximum tax free lump sum of 30% after 5 years and only 90% of the pension being taxable! Unfortunately the Chancellor recently announced in the recent Autumn Statement that these two benefits are going to be reformed for QROPS established after 5 April 2017. Interestingly such pensions are available even if you are UK resident!
So if you have a pension worth more than £500K and haven’t yet started drawing benefits from it you could benefit from considerable tax benefits were you to take advice from a professional pensions specialist.
Ring us on 01908 523740 or email firstname.lastname@example.org.
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.