Pension contributions can be a tax efficient way of accruing wealth for the future. However, consideration should be made as to the potential tax consequences that could arise as part of pension planning.
Benefits on Retirement
Most schemes will allow an individual to take 25% of their pension pot tax-free upon retirement, subject to the lifetime allowance (£1m for 2016/17). Therefore, a taxpayer could receive up to £250,000 (25% of £1m) of their pension pot tax-free upon retirement, with the remaining funds being liable to income tax. Taxpayers should discuss the most effective options for drawing these funds with a qualified independent specialist.
The government’s Pensions Advisory Service (TPAS) is available to taxpay...
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