East Anglia–based members of the UK200Group of independent chartered accountants and lawyers are calling on people who are still unsure of changes to the UK’s pension regime to seek professional help.
On the 6 April the UK’s pension rules saw the biggest shake-up in more than a decade, which has allowed thousands of people to access their entire pension pot for the first time.
Under the new rules, anyone aged over 55 with a defined contribution scheme can now choose to take a series of lump sums from their pension pot or withdraw it all at once. A quarter of each lump sum taken will be tax-free, while additional funds taken out will be taxed at each individual’s marginal rate of income tax.
Additional rules surrounding the transfer of pension’s funds to family members after death have also been introduced. People with a defined contribution pension who die before the age of 75 are now able to pass on their unused pension pot to a beneficiary tax-free, meaning they will no longer be required to pay 55 per cent tax on the lump sum.
Those over the age of 75 will also be able to pass on any unused pension to a beneficiary, which will then be taxed at the marginal tax rate of the beneficiary who receives it.
Nick Willis, President of the UK200Group, said: “The introduction of the latest pension changes mark a significant change for those with defined contribution pensions that will be welcomed by many.
“Ahead of the introduction of the new rules, there were many fears that people would spend their entire pension pot on frivolous items, such as expensive cars and holidays, but early indications seem to suggest that those choosing to take advantage of the scheme early on are doing so in a sensible manner.”
However, he added that people need to be aware of the tax implications under the new scheme.
“While most people may be aware of the changes, some may not be so well informed about the tax they may be required to pay, not only from the withdrawal of their pension, but also from future investments made using pension money.
“Although the Government is providing help through the Pension Wise scheme, many individuals may find themselves better off receiving professional advice that is tailored to their individual needs to ensure their future is properly budgeted for.”
The UK200Group has members across East Anglia, , including George Hay, Moore Thompson, Price Bailey, Lambert Chapman, Taylor, Viney and Marlow, Griffin Chapman and Edmund Carr, who provide a wide-range of services, including financial investment and tax planning, to a number of individuals in their area.
To find a UK200Group member in East Anglia visit www.uk200group.co.uk