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If
you are a business owner, pensions are still one of the most tax-efficient ways
to save for your retirement. You receive tax relief at your highest rate(s) and
if your company pays the pension premium for you, their pension contributions on
your behalf do not attract employer or employee National Insurance, unlike your
salary.
New
pensions tax regime
Proposed
changes to pension legislation are set to take effect from 6 April 2006 when a
single new
pension's tax regime will apply to members of all approved schemes
(henceforward to be called registered schemes). |
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Virtually
all existing approved schemes (occupational, personal, stakeholder and
retirement annuity contracts) will be subject to the rules of the new tax
regime.
Lifetime
Allowance
A
single Lifetime Allowance limiting the total amount of pension savings that can
benefit from tax relief will be set. In tax year 2006/07 this will be £1.5
million. This will be increased in each subsequent tax year as indicated by the
Treasury. Where the value of an individual's retirement benefits exceeds the
Lifetime Allowance, a charge of 25% will be levied on the excess fund (55% where
the excess is taken as a lump sum). Where the excess fund is used to provide an
income this will be subject to tax at your marginal rate(s). |
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Tax
efficient
Just
like other employees, as a business owner you should use your occupational
pension arrangements to ensure that your personal affairs are structured as tax
efficiently as possible. We can assist you with this. For example, a small
self-administered pension scheme could allow your company to invest in many
areas, including commercial property, in order to build a substantial portfolio
of investments.
We can give you an informed
independent review of your
current situation. Please
e-mail or contact us for further
information. |
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