8th February 2012

LV= A fix now can save a fortune

I'm sure I'm not alone in having an internalised argument each year when the car is due for its annual service. On one shoulder the devil says 'save yourself a couple of hundred quid and put it towards that Aston Villa season ticket you've promised yourself' whilst the angel is saying 'don't be a fool, a few hundred pounds now could save you a fortune
in the long run'.

Luckily for me the angel wins every time.After all, have you seen Villa this season?

The same can apply to pension planning. On the face of it, someone with a pension
fund worth £500,000 with 20 years to retirement shouldn't really need an annual pension 'service' but a simple step taken now for that particular client could potentially avoid a massive tax bill further down the road.

Let me explain more. From 6 April 2012, the Lifetime Allowance - the level of pension benefi ts that can be crystallised without incurring a tax charge - will be reduced from £1.8M to £1.5M. This means a lower threshold, and potentially higher tax bill for anyone exceeding the Lifetime Allowance. The tax rate is 55%, which could mean an increase in tax of £165,000 (55% of the £300,000 difference in the threshold) for someone expecting to hit the £1.8M mark and taking the benefi ts as a lump sum.

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Pensions