Pension changes do not need to cause tax pain

Retirement savings for about 360,000 people could face 55% tax but there are ways to safeguard pensions

 

A RECENT reduction in the UK pension allowance could put some of your retirement savings in the firing line for 55% tax. While most people will not notice this change, it could affect around 360,000 people.

For expatriates in France there may be opportunities to safeguard their pension from higher taxation.

Through the ‘lifetime allowance’ the UK government limits how much you can hold in pension savings (other than state pension) without paying extra tax. It was £1.8m in 2011 but has since fallen to £1m – £250,000 less than 2015.

Even before this reduction, more people than ever were paying higher taxes on their pensions. In 2015-16 the Treasury collected 62% more – £126m in total – than the previous year from people who breached the allowance.

How could it affect you?
In practice, it means anything over £1m in UK pension savings may be taxed at 55% when you take it out or pass it on after death as a lump sum. If ...

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