Fixed Protection Details Due Monday

Fixed Protection Details Due Monday.

Whilst this may not affect all readers it will affect some. The pension lifetime allowance (the maximum amount you can build up inside pensions during your lifetime) will reduce from £1.25 million to £1 million on 6 April 2016.

In addition, new rules started the new tax year where higher earners will also have the yearly amount they are allowed to paid pensions potentially reduced.

What happens if I exceed the lifetime allowance? You will be subject to additional tax each year.

How can I protect against the reduced lifetime allowance? As with previous reductions HMRC will allow people to protect themselves by either registering for Fixed Protection or Individual Protection. However, it has been left quite late this year with no details being supplied and details of how we will be able to protect ourselves against the reduced lifetime allowance will supposedly be published on Monday.

Comment

Whilst the cut in the lifetime allowance is not welcome, we must prepare for it. We suspect that Fixed protection 2016 and Individual protection 2016 will follow the same format as Fixed protection 2014 and Individual protection 2014. Quite simply, for fixed protection you are not allowed to accrue any further pension benefits and will register your pension At 1.25 million and for individual protection where you have pension rights over £1 million but below £1.25 million you will be able to protect the value of your pension as at fifth of April 2016 e.g. at 1.1 million but still accrue further pension rights.

No doubt next week we will have news on the video for you on pension lifetime allowances and Fixed protection 2016 and Individual protection 2016.