What's payment allowance for annuity contributions?
Total contributions from the individual and an employer qualifying for tax breaks are restrained by the once a year allowance, that the prior government had set at £255,000 till April 2016. The coalition govt. however reported in October 2010 annual allowance will be reduced to £50,000 with effect from April 2011. It's going to be fixed at that level till April 2016 and afterward will be index-linked. The government further announced that it also will be possible to take on any unused yearly allowance for a period of three years to negate against contributions in excess of the yearly allowance in a single year.
The yearly allowance is applicable to all contributions made to registered annuity schemes in the tax year and contributions above the allowance will be subject to a yearly allowance charge.
Prior to 6 April 2011, the annual allowance didn't apply to an annuity arrangement in the year of death or to any arrangement in a tax year when benefits were taken (crystallised) in full from that arrangement. This relaxation forestalled the yearly allowance from applying on early or ill health retirement. It also meant that subject to the then set out restricitions on higher/extra rate relief, all allowance funding might be deferred until the year of retirement. Nevertheless from April 2011, the annual allowance will apply in the year of taking benefits, except on death or on grim bad health. There are no exemptions for premature retirement or redundancy. Making one-off sum allowance contributions is a complicated area of financial planning and if this isn't finished exactly then tax charges might be levied to your intention. It is always a careful plan to ask for pro finance advice from a reputable fiscal advice firm. This set of circumstances is amongst the only a few occasions when the to your question are Pension Lump Sums taxable and the answer might be yes! Hence the continuing need to take advice from your adviser.
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Early Pension and Early Retirement are key issues looked at by My UK Pension Plan, an online service which connects individuals with Financial Advisers
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