Transitory protection for pre-A-Day rights to Non-Taxable payment sums
There are three kinds of tax-free payment sum rights that could be given transitional protection.
Where a person has elected for primary protection, any tax-free cash entitlement (up to 25 percent of fund worth) will be protected. The member’s tax-free one-off payment sum entitlement is worked out as at 6 April 2006 and this amount
into the pension nearly six weeks after the contribution was made. Higher rate taxpayers will be able to reclaim a further 20 per cent and extra rate taxpayers 30 per cent on some or The majority of the contribution through self-assessment. The additional ratio of 20/30 percent is given by extending the point at which the individual will begin to pay higher/extra rate tax by the quantity of the gross contribution.
An employer can also make contributions to an employee’s own annuity, subject to the annual allowance.
Other third parties may remit payments for the individual who has the stakeholder or their personal allowance plan. 3rd party payments will count going towards the plan holder’s contribution limits, and tax relief will be given at the rate applicable to the owner of the plan. This implies that a more elevated rate taxpayer making a contribution for a basic rate taxpayer (or non-taxpayer) would not be approved for or receive higher rate tax allowances.
First protection permits clients to basically remain members of allowance schemes subject to a percentage factor above and beyond the lifetime allowance. In this eventuality, if an individual continued active membership of a pension scheme, i.e. By continuing to contribute or place benefits in a project, then this is one of the only circumstances when the correct solution to your question will pension lump sums be taxed and the answer could most likely be yes.
Listening to advice regarding this very complex area of pension planning is crucial.
Early Pension and Early Retirement are key issues looked at by My UK Pension Plan, an online service which connects individuals with Financial Advisers
