Pension Planning

The UK has set rules when it comes to the timing, form and taxation of retirement and death benefits paid from pension schemes.

The basic UK premise for pensions is one of deferred tax – the tax focus is on payments out rather than contributions in; however, tax will also arise on the way in if contributions exceed an annual allowance, itself being tapered for those on high income.

6 April 2024 saw the abolition of the lifetime allowance and with it the tax surcharge levied on pension arrangements worth more than that. Even so, your lifetime allowance on 5 April 2024 – and any benefits taken before then – determines how much of your pension funds can still be taken tax-free by you in your lifetime and/or your successors on your demise.

Establishing your pre-6 April 2024 lifetime allowance and your post-5 April 2024 tax-free lump sum allowances, can be a challenge.  There may be opportunities to obtain higher tax-free allowances, but timing is all. Not least, obtaining any enhancements before taking any more out of your pension.

Cross-border pension arrangements are increasingly common: you live, work or retire in one country; your pension arrangement is in another. While you are UK resident are your or your employer’s contributions to a non-UK scheme potentially exempt from UK tax? And to what extent are retirement benefits received from a non-UK pension scheme exempt from UK tax?

If you move abroad and leave behind a UK pension scheme, can you continue to pay into it? And how will the retirement and death benefits eventually be taxed?

We will help you to understand how your pension arrangements operate and how they will unfold in the future in your lifetime and beyond.

While tax breaks are offered to encourage saving for retirement, pensions are subject to their own peculiar UK tax treatment – whether UK or overseas schemes.

It is important to ensure that you do not pay unnecessary tax because of paying too much into your pension or continue to hold old plans that give dependants little or no choice on how to manage the pension fund they might inherit from you.

With this in mind, we can advise you on:

• The optimum amount of tax efficient pension contributions within the allowances available including any unused and carried forward from earlier tax years
• Working out your default post 5 April 2024 tax free lump sum allowances on retirement and/or your demise, and whether you can increase these at all
• Making sure that any retirement benefits taken from a non-UK pension scheme are done so in a tax-efficient way
• Succession planning to make sure those you may wish to benefit can do so in the most tax-efficient way possible