Now we have lifetime allowances under pension simplification rules. The 6th April, 2006 was an important date in the pensions industry, and it got tagged with the label ‘A-Day’. New tax regimes were brought in, and one was about statutory lifetime allowances for the maximum amount payable from approved pension schemes…and still being treated as tax-privileged. Basically this means the size of your pension fund. Figures for five years were provided and these follow. Interestingly, pension funds over the amounts shown will have a ‘recovery charge’ of 25% on vesting. If all or part is taken as a lump sum this will be taxed at 40%. If taken as an income normal income tax rates will apply. The overall tax charge works out at 55% ! Figures:
Tax Year 2006/2007 £1.50m
2007/2008 £1.60m
2008/2009 £1.65m
2009/2010 £1.75m
2010/2011 £1.80m
