From April 2015 pension holders, aged at least 55, will have freedom over how they take an income from their pension. You could even take the whole fund as a lump sum if you so wish. You will then be able to spend, invest or save it as you prefer.
As now, there is the option to take a 25% lump sum that will be tax free, but the new rules allow the remainder of your pension to be withdrawn at a later date of your choosing.
The main change are
- What you do with your pensiion is no longer restricted.
- You are no longer expected to purchase a regular income (an Annuity) from your pension
- The amounts of any withdrawals are no longer restricted.
- You won't have to pay 55% tax on anything that you leave to your heirs
- Any withdrawals will be treated as Income for tax purposes. They will be added to any other income you receive (e.g. your salary) and might result in tax being charged at a higher rate. A basic-rate (20%) taxpayer could be pushed into the higher (40%) or even Additional Rate (45%) income tax bracket.You will be able to manage your tax liability by staging the pension withdrawals, spreading the withdrawals over a number of tax years to reduce the liability in any on year.
The Pension changes open up a number of financial opportunities in a complex area. To fully take advantage of these, we strongly advise that you seek professional advice from a fully qualified and regulated Independent Financial Advisor. To arrange for a no obligations, initial free telephone consultation click here.