Pension Lifetime Allowance Decrease

Newsletter issue - December 2011.

There is another change due in April 2012 that will affect tax relief for pension contributions. The Lifetime Allowance, which is the maximum tax favoured fund you can have in a pension scheme, will reduce from £1.8 million to £1.5 million from 6 April 2012.

The maximum fund of £1.8 million will produce an index linked pension of around £75,000 p.a. for a man retiring at 65, using current annuity rates. So the new cap of £1.5 million is not particularly helpful. If you already have pension funds, which in total are worth more than £1.5 million, you may need to apply to HMRC to ring-fence your existing pension savings for tax purposes, under what is called 'fixed protection'.

To work out whether fixed protection is required, you must add together the values of all your various pension funds. Most people will have accumulated funds in a number of schemes over their working life as they change jobs, or start contributing to new pension schemes for other reasons. If you are in this position, you will need to request a 'Lifetime Allowance Factor' (valuation of the fund), from all the companies with which you hold a pension scheme. Such requests normally take around eight weeks to process, so you need to get a move on.

The application for fixed protection must reach HMRC by 5 April 2012, and it must be made on the prescribed form. Late applications will not be accepted. Where fixed protection is granted you will not be able to make any further tax-allowable pension contributions to a registered pension scheme, or build-up further benefits in a defined benefits scheme. So if you are considering applying for fixed protection for your pension funds, you should first take expert pensions advice.

Get a fixed quote

Fixed prices for agreed services

FAIR FEE POLICY. We believe you should always be in control of your fees with no surprises. You are entitled to a competitive fixed quote for agreed services, which is exactly what we charge, not a penny more. Most clients choose this option although if you prefer to pay an hourly rate we can arrange that too.

To receive a fixed quote for your specific circumstances either arrange a Free No Obligation Consultation or submit the form below. The form is designed for most of the routine accountancy services. If you require something more specialist, please contact us directly. If necessary we will contact you for further information.

If you are a new start up business, please use estimates. Full quotes are provided within 2 working days.

FIXED QUOTE REQUEST FORM »

Make more, keep more, work less

Get the right advice and take action

MAKE MORE

Have clear goals including long, medium and short term for what you want to achieve and develop a roadmap to get you there... read more »


KEEP MORE

Use our Tax Planning Service to ensure you don’t pay a penny more in tax than is necessary... read more »


WORK LESS

Work ON your business and not IN your business - work ON your systems so the systems run the business and your people run the systems, leaving you free to have more holidays... read more »

Start Up

Are you looking to start a new business?

Choose your business size to see how we can help you

Small

Key points for our small business clients to know

Choose your business size to see how we can help you

Medium

Help and assistance for medium sized businesses

Choose your business size to see how we can help you

Large

See our extensive range of services for your needs

Choose your business size to see how we can help you