Tax traps for pensions

One would expect the tax liability of pensions to be relatively straightforward but because new legislation has been tacked on to the existing framework and given the government’s paranoia to prevent tax abuse it is rapidly becoming one of the most complex areas of taxation with hidden traps for the adviser and client. Here we identify some of the potholes that exist and look at one opportunity.

 

1. Money purchase annual allowance

It is estimated that almost one million people are at risk of tax charges because they have not properly understood the complicated new rules on the effect that pension withdrawals can have on the permitted level of pensions savings. This is a result of the introduction of the money purchase annual allowance (MPAA).

Since 6 April 2015 savers have been given greater flexibility in accessing their pension...

Username *

Password *

Remember me