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Post Election Planning…

The recent general election has produced an unexpected result and showed the limitations of predictions (a subject for another day I feel…). However, what could it mean for the future in financial planning terms?

Pensions – Lifetime Allowance

The lifetime allowance is again set to drop in April 2016 from £1.25 million to £1 million. This means that in the space of 4 years the lifetime allowance has reduced by 44%.

For those clients whose funding has ceased, this is not a huge issue as they will either have protection in place, or will need to apply for it soon. For anyone who has a large pension pot and isn’t getting advice, my suggestion is to get advice fast. The tax penalties for getting this wrong are very penal.

Structuring the choices you have with your pension is a complex area that can reach into estate planning as well as income planning. Good advice is essential.

Manifesto Possibilities – Pension Tax Relief

During the election there was mention of reducing higher rate tax relief for those earning over £150,000. The Conservatives propose to do this by reducing the annual allowance by 50p for every £1 over £150,000 someone earns until their allowance falls from £40,000 to £10,000. For those people earning over £150,000, there is a clear window of opportunity for pension funding that may disappear.

We will be discussing with clients the opportunity to maximise contributions whilst they can.

Manifesto Possibilities – Tax

The Conservatives made it clear that they would not be looking to raise headline rates of income tax, NIC or VAT. They also have made clear their desire to remove the family home from IHT. The proposal in their manifesto was to raise the combined IHT threshold to £1m where the family home is passing to children or grandchildren. It will be interesting to see how this works in practice.

The above proposals show how linked all areas of financial planning are. Please do pass our details on to any friends, family, clients or colleagues who you feel would benefit from working with us to develop a joined up strategy.