Transitory Protection For Pre-A-Day Claims On Tax-free Lump Sums

Transitory protection for pre-A-Day claims on tax-free lump sums

There are three main kinds of tax free payment sum rights that can be given transitional protection.

Where a person has elected for primary protection, any tax free cash entitlement (up to 25 % of fund value) will be protected. The member’s tax-free money sum entitlement is worked out as at 6 April 2006 and this amount

into the annuity 6 weeks after the contribution was made. Higher rate taxpayers will be well placed to reclaim a further 20 per cent and additional rate taxpayers 30 per cent on some or All of the contribution through self-assessment. The additional ratio of 20/30 % is given by extending the point at which the individual will start to pay higher/further rate tax by the of the gross contribution.

An employer can also make contributions to an employee’s personal pension, subject to the once a year allowance.

Other third parties may remit payments for the individual who has the stakeholder or their personal pension plan. Third-party payments will count toward the plan holder’s contribution limits, and tax relief will be given at the rate relevant to the owner of the plan. This suggests that a more elevated rate taxpayer making a contribution for a basic rate taxpayer (or non-taxpayer) would not be approved for or receive higher rate tax allowances.

The first protection allows clients to fundamentally remain members of pension schemes subject to a percentage factor over and above the lifetime allowance. In this case if an individual continued active membership of an annuity scheme, i.e. By continuing to contribute or place benefits in a project, then this is probably one of the only circumstances when the correct solution to your question will pension lump sums be taxed and the answer could most likely be yes.

Taking advice concerning this very complex area of annuity planning is essential.

Early Pension and Early Retirement are key issues looked at by My UK Pension Plan, an online service which connects individuals with Financial Advisers