Financial Planning Matters… a monthly insight with Pearson Solicitors and Financial Advisers.
Pearson’s Financial Advisers are keeping a watchful eye on an anticipated announcement regarding the overhaul of pension tax relief.
Chancellor George Osborne will announce the outcome of a pension tax relief review on 16 March.
While he hasn’t confirmed what, if anything, will change, The Financial Times and other reputable sources are reporting he’s planning a flat-rate ‘savings incentive’ of between 25 per cent and 33 per cent for everyone.
If correct, higher-rate and additional-rate taxpayers are expected to lose a benefit worth up to £8,000 a year and are being urged to consider bringing forward any planned pension contributions in case the shutters are brought down.
Basic-rate and non-taxpayers may wish to consider delaying any planned contributions for a few weeks in case any changes take effect immediately.
Financial Services partner Richard Eastwood said: “Hardly a single day goes by where we don’t have clients asking ‘Is a pension is any good?’
“Such is the perceived complexity around pensions that a lot of people just place their annual statement in a cabinet draw never to read again!
“If you had the cash equivalent in the sideboard I am pretty sure you would be keen to get that money working for you.
“Firstly if you have a pension I would recommend you get to grips with exactly what it is worth and what it will entitle you too.
“Not only do most people not know how their pension is taxed, most don’t even know how it is invested and of course this can make a huge difference to your final income in retirement.
“Lastly would, a single rate of ‘savings incentive’ as George is suggesting benefit people?
“The review is due on March 16 and if you need advice on getting your well-earned tax relief I would urge you to get in touch.”
Call Richard on 0161 785 3500 for more information and advice.