Are the latest changes\u00a0to\u00a0\u00a0pensions announced last\u00a0week the first step towards the widely anticipated abolition of the 25% tax-free lump sum. The \u201copportunity\u201d to take each draw down with 25% tax free instead of a one off\u00a0lump sum has been introduced\u00a0as an additional flexibility, but is also a further incentive for those who can afford to do so to leave funds invested rather than taking a pension.<\/p>\n
These new rules added to the recently announced option to gift away pension funds on death tax free to the next generation make\u00a0the\u00a0of the one-off tax free lump sum appear increasingly\u00a0over generous and potentially\u00a0more\u00a0vulnerable to abolition.<\/p>\n
The new rules are to be introduced from 6th<\/sup>April 2015.\u00a0What we end up with is an effective lower\u00a0rate of tax on sums drawn from a pension of 15% for a basic rate tax payer and 30% for a higher rate tax payer.<\/p>\n My own view is that anyone who is able to do so should be considering\u00a0whether\u00a0it is appropriate for them\u00a0to take their 25% tax free lump sum before 5th <\/sup>April 2015. As always please take proper advice first before making any significant financial decisions.<\/p>\n","protected":false},"excerpt":{"rendered":" Are the latest changes\u00a0to\u00a0\u00a0pensions announced last\u00a0week the first step towards the widely anticipated abolition of the 25% tax-free lump sum. The \u201copportunity\u201d to take each draw down with 25% tax free instead of a one off\u00a0lump sum has been introduced\u00a0as an additional flexibility, but is also a further incentive for those who can afford to[…] <\/p>\n