Introduction:

Before you go any further, it is important that you are reminded - Corporate Consulting (Taxation) Ltd are NOT pensions advisors. Anyone interested in anything displayed on this page will require formal pensions advice from an Authorised individual or company. The information here is to highlight the use of a specific arrangement that is available through one of our commercial contacts.

If you are an Advisor authorised to give pensions/retirement/annuity advice, then please read on and then contact us for more information.

Introduction:

Having spent a lifetime building up a significant pension fund, there is nothing worse than seeing that fund lost. For many people, their pension fund could represent their second largest asset - after their home. Indeed, in some cases, the pension fund is larger in value.

If a client has a pension fund valued at £1m - and they knew that there was a chance that either the entire fund would be lost, or the tax man would take 55% on their death, surely they would like to be reassured that the advice they received took into account ALL the possible options?

The Finance Act 2011 was an interesting strategy change - it did away with the obligation to buy an annuity at age 75 - allowing people to 'draw down' an income from their pension fund forever.... Which seems good news, until you realise that at the same time HMRC have increased the tax paid on death to 55%. The Finance Act has therefore made HMRC the beneficiary on death, rather than the annuity & Insurance companies.

The tax issues apply not only to payments made on death, but also to funds in excess of the Lifetime Allowance when they are taken as lump sums or income.

We can also show your IFA how you can use your pension fund to invest in residential property.

After years building up a pension fund, we would prefer to see Client Families being the sole beneficiaries - which is indeed possible. There are a number of issues we can help an IFA address:

TAKING BENEFITS ABOVE THE LIFETIME ALLOWANCE:

Instead of taking tax-free cash and suffering a recovery charge of 55% for amounts above the Lifetime Allowance, we can work with an HMRC Approved structure and reduce this tax exposure to 25% - while enabling the Client to access loans (free from tax), which gives them the same amount in their hands as before, but also saves them IHT on death. In some cases there will be MORE money available, allowing the Client to invest in tax efficient areas such as Enterprise Investment Schemes (EIS) where 30% tax rebates are also available. Once the funds have been taxed at 25% there is no opportunity for HMRC to come back and tax the funds (or their growth) again. So, there is no opportunity for a 55% tax charge to apply.

TAX PAYMENTS ON DEATH - BEFORE DRAWDOWN:

Where an indiviual has a significant pension, above the Lifetime Allowance, they will suffer 55% tax on death on the 'excess' portion of their fund. Again, we can move their pension into an area where this tax does not apply.

TAX PAYMENTS ON DEATH - AFTER DRAWDOWN:
Once an income commences from a pension, i.e once Drawdown has commenced, there will be a 55% tax charge payable on lump sums paid out on death. Even if the funds are payable to a Spouse. Using the SAME solution, we can totally avoid this tax charge, and allow funds to be made available to the family at 0% tax.

CONTRIBUTION LIMITS REDUCED:

Contributions to pensions have been reduced from £255,000 to £50,000 - and in some cases, where protection has been applied for (on Lifetime Allowance amounts etc) - there are NO contributions allowed.

We are able to work with the Employer or Director to show them how to use an HMRC Approved PERSONAL arrangement to secure funds for retirement - without triggering any impact on their Employer or Personal Pension planning.

What do I do now?

If you, or any of your clients, have a pension fund in excess of £650,000 and you want to offer them added flexibility, then simply contact us NOW.

NOTE:

It is important that you are reminded - Corporate Consulting (Taxation) Ltd are NOT pensions advisors. Anyone interested in anything displayed on this page will require formal pensions advice from an Authorised individual or company. The information here is to highlight the use of a specific arrangement that is available through one of our commercial contacts.
 
If you want to know more, simply Contact Us Now.