Services tailored to you...
With over five decades’ experience serving a diverse range of clients in the South West, we possess an unbeatable depth of knowledge across a wide range of industry sectors.
Our specialist partners and teams can provide expert advice on everything from farming and agriculture, to military tax allowances. We’re here to help you make the most of your planning opportunities so that you can grow with confidence.
Did you know that it is still possible to apply to protect your pension(s) against previous reductions in the lifetime allowance? The lifetime allowance is set at £1 million in 2017/18, however Fixed Protection and Individual Protection may mean it is possible to save up to £1.25 million without incurring a tax charge.
What is the lifetime allowance?
The lifetime limit sets the maximum figure for tax-relieved savings in a pension fund. The lifetime allowance fell to £1.25 million on 6 April 2014, and then again to £1 million on 6 April 2016. From April 2018 onwards the lifetime allowance will increase annually in line with the Consumer Prices Index (CPI), rising to £1,030,000 for the tax year 2018/19.
Protecting your allowance
The good news is that there are two types of protection available that it may be possible to apply for:
‘Individual Protection 2016’ enables savers to fix their lifetime allowance at the value of the fund at 6 April 2016, provided the fund has reached at least £1 million in value at that date. However, the value to be protected cannot exceed £1.25 million.
Further contributions are allowed under this protection, but withdrawals exceeding your protected lifetime allowance will be subject to tax.
‘Fixed Protection 2016’ enables savers to retain the £1.25 million lifetime allowance, but prevents further contributions from 6 April 2016. This can be of benefit if total pension savings are expected to exceed £1 million when savings are accessed in the future.
You cannot apply for Fixed Protection 2016 if you already have Enhanced Protection, Primary Protection, Fixed Protection or Fixed Protection 2014.
How do I apply?
Applications for Individual and Fixed Protection can be made via your HMRC online services account.
After applying you will receive a protection notification number and a scheme administrator reference. Your scheme administrator will require these numbers when you decide to take money from your pension scheme. There is currently no deadline for making applications.
Pensions rules are notoriously complicated. Get in touch for advice on ensuring your savings are as tax-efficient as possible.