When not seeking independent advice can be taxing

Posted on Jun 19, 2018

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The introduction of pension freedoms three years ago has been well documented and we have published several blogs on what this means, particularly for people aged over 55 years old. When these changes were announced, many experts’ assumed that older people would give no thought for their future security, cash in their pension and go on a cruise or buy a fast car…

The evidence is that, in the main, this hasn’t happened. However, these changes have seen an increase in worrying stories about people being scammed by schemes which are ‘too good to be true’ and we’ve looked at some of these in a couple of previous blogs.

What has also emerged recently are statistics from HMRC which would suggest that people are making some DIY retirement benefit decisions without taking proper advice. In fact, HMRC has produced some figures on Lifetime Allowance charges which show a large increase in people paying this tax over the past ten years. In 2006/2007, 210 paid it, compared with 2,410 in 2016/2017. The most marked increases have taken place since pension freedoms were introduced in April 2015 and the large reduction in the Lifetime Allowance.

The total tax take in 2016/17 of £110m is more than five times the figure of £20m in 2011/12 and 2012/13. More significantly, there is a noticeable upward trend in the past three years.

Interestingly, more and more people are now paying either a 25% tax charge on income or 55% on a lump sum. These are not small figures and highlight the need to talk to an experienced IFA, rather than trying to sort out your own pension. Nobody should pay unnecessary income tax on pension payments and, without good advice, there’s a risk you’ll end up with a tax charge you weren’t expecting.

To avoid this, it is prudent to seek independent financial advice, preferably from a Chartered Financial Planner. The Goodman Partnership is one of only 3% of Regulated Advisory Firms in the UK to achieve Corporate Chartered Financial Planning status and the first to achieve this in Kent.

This award is achieved and maintained by meeting the rigorous standards of professionalism demanded by The Chartered Insurance Institute. This includes demonstrating our commitment to developing and maintaining the knowledge and capability of our financial planners and the rest of the team. We’ve also adopted the CII’s code of ethical practice that places our clients’ best interests at the heart of the advice we give and everything we do.

For our clients, it’s further reassurance that our financial planners are highly qualified, experienced and knowledgeable. It also demonstrates that we’re committed to building our knowledge and skills, so that our clients get the most up-to-date advice available.

When it comes your pension investments, we can help lead you through the legislative frameworks to minimise the effects of paying unnecessary tax.

To find out more, give us a call on 01892 500600 or click here 

 

 


Goodman Chartered Financial Planners is a trading name of Fairstone Financial Management Ltd. Fairstone Financial Management Ltd., is authorised and regulated by the Financial Conduct Authority – FRN: 475973 Registered in England and Wales no: 05574120. Part of the Fairstone Group. Where you have a complaint or dispute with us and we are unable to resolve this to your satisfaction then we are obliged to offer you the Financial Ombudsman Service to help resolve this. Please see the following link for further details: www.financial-ombudsman.org.uk.