What a difference a day makes
PUBLISHED: 10:56 23 March 2006 | UPDATED: 14:38 12 May 2010
ON 6 April (A-Day), new simplified rules come into effect around how pensions are taxed, offering simpler and more flexible retirement arrangements. This is what you need to know: - The many existing sets of rules governing the taxation of pensions will
ON 6 April (A-Day), new simplified rules come into effect around how pensions are taxed, offering simpler and more flexible retirement arrangements. This is what you need to know: - The many existing sets of rules governing the taxation of pensions will be replaced with a single, universal regime. - For the first time, everyone will be able to save in more than one pension scheme at the same time. - There is no limit on the amount of money you can save in a pension scheme or the number of pension schemes you can save in - although there are some limits on the amount of tax relief you can get. - You will get tax relief on contributions up to 100 per cent of your annual earnings (up to an annual allowance set at £215,000). So if you put £100 into your pension scheme, the tax relief the Government gives you on that is worth at least £28. - Even if you are not a taxpayer you can still get tax relief on pension contributions. You can put in up to £2,808 in any one tax year and the Government will top this up with another £792 - giving you total pension savings with tax relief of £3,600-a-year. - A-Day will introduce flexible retirement, allowing people in occupational pension schemes to continue working while drawing their pension, where the scheme rules allow it. - If your scheme rules allow, you can take up to 25 per cent of your pension fund as a tax free lump sum. - For more details visit the HM Revenue & Customs website at www.hmrc.gov.uk
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