-- Pension Tax Tip 1 - Recycle your income --


Protect your money from the recent Budget tax cuts
Protect your money from the recent Budget tax cuts

DWP tackles state pensions for civil partners
DWP tackles state pensions for civil partners

Maximising Pension Contributions with PIPs
Maximising Pension Contributions with PIPs

One year annuity deferral could take 24 years to recover
One year annuity deferral could take 24 years to recover

Recycle your pension income

 

Income recycling is available to those who are aged 55 or over.

Whilst it is not allowed to recycle a tax free lump sum, there have been no restrictions taken against recycling income.
The recycled income is invested in an uncrystallised pension arrangement, offering an additional tax free lump sum and improved lump sum death benefits, which are not subject to 35% tax (normally) or Inheritance Tax (IHT).

Provided the income is reinvested immediately, all other things being equal, the total fund invested should remain the same as if no income were taken (the taxrelief cancels out the income tax). However, higher rate taxpayers must be aware of the tax relief time lag. They will not have full fund replacement unless they replace the marginal higher rate tax up front from other resources before
claiming the relief later.

Recycling income into a third party’s pension is also a useful estateplanning tool. Unlike personal income recycling, this option is even possible after the age of 75, and could be useful planning for someone concerned about death while in
alternatively secured pension.

Source: Citywire

For bespoke pension advice contact Credencis.

We are situated near to Derby, Leicester, and Nottingham.

Credencis

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Views expressed by our author, are the personal views of the author alone, and are not intended in anyway to be construed as advice.They should only be used as guidance and are not necessarily suited to the personal circumstances of every individual in the UK.If you are interested in seeking advice further then please contact Credencis direct.