Financial advisors and retirement specialists are warning those planning for the future that the Treasury’s five-year freeze regarding tax allowances could impact their savings with a 55 per cent tax on retirement funds.
The initiative from UK Chancellor Rishi Sunak was designed to help raise around £1 billion for the Treasury, but it could have a powerful and negative impact on retirement planners. The pensions lifetime allowance refers to the maximum amount UK citizens can build up in their pensions over the course of their life.
Experts are now reminding Britons that while it may seem unrealistic to many people that they could achieve £1 million worth of pension savings, reaching the lifetime allowance may be closer than they think.
People who have worked hard and have been saving from a very early age and individuals whose career commands them a substantially high salary are counted among those most likely to be affected by the new rules.
Many UK savers are caught out every year, never realising they are at risk, but the tax implications can be drastic, and people often end up paying sometime unnecessarily high levies they are not expecting.
Retirement planning specialists Shropshire and Chester are often consulted by UK savers with concerns regarding their plans for the future. Experts like wealth managers help their clients to assess their resources such as pension pots, ISAs and investments, while offering strategies to reduce the amount of tax they must pay to HMRC.