Pension savings escape Autumn Budget scare

Wed 22 Nov 2017

Despite much speculation over recent weeks, surrounding the future of pension tax relief legislation, savers will have been relieved to hear there was no mention of any such change in the Chancellor’s Autumn Budget speech.

Rumours had been rife that there could be radical reforms ahead. There had been suggestions of the introduction of a single tax-relief rate for all, an age-related tax relief system to benefit the young, and changes to the current tax-free lump sum rules, to name but a few.

Paying into a pension remains an extremely tax-efficient way of saving for your future retirement needs, or for your beneficiaries. In broad terms, and subject to certain limits, as a pension saver you will benefit from tax relief on your contributions at the highest rate of income tax you pay. From age 55, you can withdraw up to 25% of your pension fund completely tax-free, with the balance being taxed as income, should you choose to access it. Changes to pension legislation since 2015 have also made it simpler than ever to pass on any unused pension assets to your beneficiaries, in a tax-efficient manner.

So for now, it seems that the existing tax benefits associated with pension contributing are safe, although with pension tax relief reported to have cost the Treasury £38.2billion in 2015/16, many will no doubt continue to be fearful that changes may come in the future. It is therefore more important than ever that you review your pension arrangements and consider taking full advantage of the tax benefits currently available.

To discuss your position and your own circumstances in more detail, please contact Ian Pickford (ian.pickford@mazars.co.uk) in the Mazars Private Client team, for further advice.