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30th March 2015
Posted in Articles, Featured Articles, Inheritance Tax, Trusts and Estates, Private Client by Forbes Dawson
The Issue
With the ‘pension revolution’ that will take place on 6 April 2015 many people are coming out of the woodwork to get on the pension band wagon.
There is a sizable minority of Entrepreneurs who have refused to invest in pensions previously on the basis that they would rather ‘build their own pension’. With the new rules that are coming in even they have to admit that pension payments are an attractive proposal partly because the pension will be an IHT protected pot which can be passed down to the generations. It is now seen as highly attractive to obtain tax relief by putting funds into an IHT protected vehicle.
We have heard of a few cases where such individuals have been wrongly advised to make pension payments of £190,000 before 6 April 2015 (equating to £50,000 allowance for the three tax years ended 2013/2014 and £40,000 for 2014/2015). While it is possible to carry forward three years of allowances when making payments this is only possible for years when the individual has been a member of a UK-registered pension scheme.
Action Point
With the above point in mind it makes sense for anybody who is not a member of a UK scheme to become a member – whether they think they will be making contributions or not. This will give them flexibility to make full use of their carried forward allowances in the future. This simple step should be taken before 6 April 2015 if the 2014/2015 allowance is to be carried forward.
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