The Chancellor’s March Budget was aimed primarily at helping UK businesses increase their production but it also includes a number of new measures affecting savings and pensions – some effective immediately and some promised for April 2015.
Pension Changes
The most revolutionary announcements relate to personal pensions. With immediate
effect those who are aged 60 and over can cash-in small pension pots – up to 3 different
pots and to a maximum of £10,000 in each pot. 25% of the pot can be taken as tax-free
cash with the balance being taxed as if it were earned income. The Chancellor has also
increased the “Triviality” limit whereby a pension fund of up to £30,000 can be taken as
cash (25% tax free) if that is the only pension benefit a person has. The promise is that by
April 2015 this freedom to access the money in your pension pot will apply to the whole
pension for those aged 55 and over. Here again 25% of what you take out will be tax-free
and the balance will be treated as earned income.
The Chancellor wants to enable everyone to be able to access their pension savings at any
time after age 55 and without having to purchase an annuity – although an annuity may
well still be the best choice for many. With immediate effect he is increasing the level of
income a person with an Income Drawdown Pension can take each year. Those who have
a guaranteed pension income of at least £12,000 will be able to access all of the money in
their pension fund.
No comments:
Post a Comment