Good news for Drawdown users – GAD rate overhaul means more to come
- 20% hike in pension drawdown limits confirmed; income will simply go up by 20% from the start of the clients next drawdown year after 25th March 2013.
- Added bonus that barrier to transferring protected pre-April 2011 drawdown cases has been removed.
- Overhaul of the GAD drawdown rates; increasingly drawdown rates have not mirrored annuity rates – a review of the rates has been started to get rates back on track.
Pension allowances cut – but theres still room for manoeuvre
- From tax year 2014/15 annual allowance drops to £40,000; carry forward continues but the new £40,000 allowance will eat into that so make the most of that while you can.
- Lifetime allowance drops to £1.25 million; two new options to lock into a higher LTA before then, (1) Fixed Protection 2014 will give a continued £1.5 million LTA but giving up future accrual (2) Individual Protection to give a personal LTA equal to 2014 fund value between £1.25 and £1.5 million, no need to give up accrual.
- No change to pension tax relief
- See 10 good reasons to pay into a pension this tax year – http://www.robertson-baxter.local/news/67/10-good-reasons-to-pay-into-a-pension-this-tax-year
Family tax breaks
- Childcare changes in 2015 provide £1,200 boost from government.
- Also from 2015 20% tax relief on savings used to purchase childcare vouchers up to £6,000 per annum.
- Keeping child benefit; it is worth £1,752 a year for a family with 2 children and is under threat if annual income is over £50,000 – a pension contribution may help keep child benefit.
- Child Trust Funds (CTFs) and Junior ISAs (JISAs); likely to allow CTFs to transfer into JISAs.
Anti-abuse – general measures and IHT specifics
- General Anti-Avoidance Rule (GAAR) introduced covering income tax, capital gains tax, inheritance tax and corporation tax.
- Specific legislation brought in to counter IHT avoidance schemes.
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