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With the government deciding that UK savings are insufficient to meet the needs of the existing workforce in retirement, pensions have proved a tax efficient method of saving and with auto-enrolment is has become compulsory for most employers. The Pensions Regulator has issued staging dates by which time employers need to have engaged with employees and started auto-enrolment for all qualifying employees. There is much to consider when setting up an auto-enrolment scheme before considering the even greater burden of on-going compliance.
Despite pensions being a tax efficient investment vehicle both for retirement and inheritance, in recent years tax relief has been restricted. From 6 April 2017 additional rate tax payers (ie those earnings over £150,000) will not be entitled to the full annual allowance (£40,000). There is also a cap on the size of a pension pot before tax benefits are clawed back. With pensions as with many investment opportunities there are options to protect the tax benefits of such investments. Again professional help is advisable as the amounts and consequences are high.
It is important employers and workers obtain the right advice. At Johnsons we are aware of the shifting landscape regarding pensions and advise not just on the tax consequences but on solutions to the challenges posed by increased regulation and tax.
If you would like more information or would like to speak to us direct then call us on 020 8567 3451. Or if you would prefer, ask us a question online.