2014 Budget and the Pension Revolution

We find most clients recognise how tax efficient pension contributions can be for them and their businesses BUT.

Yes, there is always the buts – When can I draw my cash? How much can I draw? What if I don’t want to buy an annuity?

Currently investors aged 55 or over can take a lump sum tax free payment of 25% of their fund. The rest can be drawn annually as taxable income using draw-down provisions or buying an annuity.  There are rules in place that then cap this income.

That is now all changed. From April next year pensioners can take their whole fund as a lump sum, the first 25% will still be tax-free, the balance taxable.

The proposals are subject to consultation but we believe this takes away one of the most regularly cited obstacles to setting up or increasing contributions to a pension.

Not only may it encourage increased saving but will mean big changes in the annuity market. In fact, will there even be one?

We will keep you updated of news on these pension changes up to the  introduction.

RTI and PAYE Penalties

Happy with RTI?

Now is the time to make sure you are as from April 2014, HMRC gets tough on those employers who fail to file and pay on time.

The penalty regime is introduced in stages as follows:

From April – interest payable on late payments

From October – penalties payable for late filing

From April 2015 – penalties and interest payable on late payments

Want to be better off in retirement? Don’t get divorced!

A study by the Prudential has found people entering retirement that have been divorced are, on average, £2,600 worse off than those that have avoided a marriage break up. Typically they are 16% worse off (financially, anyway!).

Given that nearly 40% of those retiring this year have been divorced this is having a significant impact on new pensioners, particularly women whose incomes tend to be most vulnerable, many relying on their husband’s pension pot rather than assets held in their own name.

 

Help for credit card borrowers

Don’t understand APR? Can’t work out the true cost of balance transfers and cash advances? Want to know how long it will take to repay off your card debts and how much interest you will pay? Help is now available after the UK Cards Association launched www.cardcosts.org.uk

Particularly useful are the online tools allowing you to compare different payment plans and a clear explanation of the terms and conditions referred to in credit card agreements.

 

HMRC expect to collect £1bn more from tax evasion in latest spending review

During the June spending review the government announced as part of its cuts that HMRC is expected to save £1bn in departmental and administrative costs for 2015-16. However, it is expected to increase its targets for revenues from tax evasion to £24.5bn, a £1bn increase on 2014-2015.

George Osborne said when presenting the review: “when it comes to Her Majesty’s Revenue & Customs, despite the fact that this department will see a 5% reduction in its resource budget, we are committed to extra resources to tackle tax evasion”

“the result is we expect to raise over £1bn more in tax revenues from those who try and avoid paying their fair share”