Just how hard is it to get things wrong when you think you are saving carefully for your retirement?

Just how hard is it to get things wrong when you think you are saving carefully for your retirement?

“It is not just a case of saving for retirement or investing it in the right way, HMRC set out a minefield of traps that you need to avoid or woe betide the unwary” says Nick Lanigan, Tax advisor at ASE Plc.

If you get things wrong then what you might expect when you retire might turn out to far less than you expected.

So, here is a few handy hints from Nick to look out for when reviewing your pension;

1. Payments each year cannot exceed £40,000 albeit you can utilise unused payments in the two previous years where payments were less than £40,000
2. If you earn more than £110,000 the maximum of £40,000 reduces on a sliding scale to a level of £10,000 per annum
3. If you have already taken your pension, the maximum payment you can make is reduced to £4,000 per annum
4. Your pension fund cannot exceed £1.055m unless the individual has “protected status” from an earlier period.

In an era where tax simplification is being talked about in positive terms, Nick comments “taxpayers should not hold out much hope if the experience of pension legislation is to be used as an example”.

As far back as 1986, successive governments have sought to simply pensions but industry experts estimate that up to 1m taxpayers are at risk of taxation charges on pensions because they do not understand the complicated pension rules that now exist.

 

In case of any questions please contact at Nicholas.Lanigan@ase-global.com
Tel: +44 (0)161 493 1930