The Emergency Budget, Pension, Capital Gains Tax Changes and QROPS
Following the emergency budget yesterday, the QROPS advice team at Offshore QROPS would like to highlight the pensions and capital gains tax announcements.
Compulsory Annuity At Age 75 * From April 2011 the compulsory age at which annuitisation must commence will be increased from age 75 to age 77. * If you reach age 75 between now and April 2011 transitional measures will be implemented. * For members of money purchase pension schemes, including Self Invested Personal Pensions (SIPPs) and Stakeholder pension schemes, a secured income (annuity) will need to be purchased by age 77. * The change will also apply for the purposes of inheritance tax charges that apply specifically to those pensions scheme members age 75 and over. * We expect more detail to follow shortly.
Pension Tax Relief *George Osborne aims to work closely alongside the pensions industry to develop and introduce an alternative to the reduced pension tax relief for high earners from April 2011. However change will only be implemented if revenue of at least £3.5bn still remains to be achieved. * The announcements suggest that an annual allowance of between £30,000 and £45,000 would still achieve the required revenue. * George Osborne intends further reviews with the pensions industry.
UK State Pension * The earnings link to Basic State Pension will be restored from April 2011. * The increase in the state pension age to age 66 will be brought forward. A report on this will be available from September 2010.
Capital Gains Tax (CGT) * The annual capital gains tax exemption of £10,100 will remain. However, this will rise in line with inflation in future years. * Basic rate income tax payers will continue to pay CGT at 18% * As of midnight 22/06/2010 the rate of CGT that higher rate income tax payers pay increased to 28%. These changes may or may not have an effect on your finances surrounding your migration.
To find out how these changes affect you and your QROPS options please contact Andrew Hains (Senior Client Adviser) or Mark Jones (Pension Transfer Specialist) at Offshore QROPS on 00 44 (0)1483 202072.
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