Welcome to the final day of 7 days of our New Year money tips – today we look at the benefits of reviewing your pension.Organise your pension
The writing is on the wall for up to 5m pension savers, currently enjoying higher-rate tax relief on their pension contributions in 2016. The generous reduction (currently 40%) is about to be heavily curtailed. George Osborne has already indicated that major reforms to pension taxation will be announced in his March Budget.
Early indications are that all pension savers, no matter what rate of income tax they pay, are likely to be offered tax relief at a flat rate of 33% although some analysts predict that the scheme will be scrapped altogether. The Government may also create a less generous tax system for savers with valuable final salary pensions.
We ‘ll be posting updates of any developments that arise from the Budget on March 16th.
Also worth noting is that for higher earners from April 6th 2016 the chancellor will be placing restrictions on the amount that can be saved tax efficiently into a pension. The maximum annual contribution of £40,000, will decrease on a sliding scale for those earning more than £150000 so that those earning £210000 for example, will only be able to pay in £10,000 per year.
Disclaimer: This article not constitute financial or other professional advice. You should consult a professional adviser if you require financial advice.
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