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Pensions

Pensions

Whether you want to make contributions to your pension fund, or are already in receipt of a pension and unsure of the tax consequences, PD Tax can help you to understand the UK tax implications of pensions.

Pensions can be an efficient method of saving for many taxpayers as they benefit from a range of tax reliefs designed to encourage people to save for their retirement.  However these reliefs can come with certain restrictions based on things like your income, available annual allowance, and the amounts already saved in a pension.

We can assess your circumstances and help you understand the tax implications of your pension, including determining the maximum contributions that you can make whilst retaining your eligibility for relief and identifying any useful tax claims that can be made.

Alternatively, you may be keen to withdraw funds on retirement and are unsure of what tax you may have to pay. Taking into account your future goals, we can help identify the most tax efficient route to access your funds while ensuring that your objectives can be met.

THE PROBLEM

The client was a member of a defined benefits pension scheme and the growth in their pension rights in 2015/16 exceeded their annual allowance for that tax year.

The excess growth gave rise to an income tax charge (aka an “Annual Allowance Charge”) which was overdue and needed to be disclosed to HMRC.

THE SOLUTION

We immediately registered our client with HMRC’s appropriate disclosure facility to minimise the potential penalties payable.

We then provided our client with calculations showing the potential income tax, interest, and penalties payable, explaining how these would be disclosed to HMRC and providing instructions on how to pay the amounts due.

After our client fully understood the position, we prepared a full disclosure to HMRC explaining how the Annual Allowance Charge arose and why the minimum possible penalties should apply given our client’s mitigating circumstances.

Following the submission, we kept in regular contact with HMRC’s disclosure team to ensure our client’s disclosure was being processed correctly.

THE RESULT

HMRC accepted the disclosure in full and imposed no penalties on our client.

The final amounts payable only included the income tax from the Annual Allowance Charge and late payment interest.

The client was very satisfied with the outcome!

Contact us today to discuss your tax requirements.
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