Pensions: Finance Bill More Tax Free Cash

Pensions: Finance Bill More Tax Free Cash

A recent change announced in the Finance Bill will allow some people to take more of their pension benefits as a tax free lump sum, according to Standard Life.  A fund worth £100,000 on A-Day – the day when pension tax changes were introduced in April 2006 – could see a pensioner take a lump sum of £65,000, as opposed to just £60,000 on the A-day rules.  

The difference of £5,000 is caused by the government’s simplification of rules, resulting in people no longer needing to have built-up benefits post A-day in order to receive additional amounts of lump sum payment.

Our view

This minor change is good news for those who technically froze their pension benefits before April 2006 and have done nothing since.  We suggest it will be certain people who took advice to take this action to protect large tax free lump sums.

If you have pension funds that you built up before April 2006 and need some expert advice, contact us.

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