Financial advisors and retirement specialists have advised the public that the Treasury’s five-year freeze on tax allowances could deal a significant blow to pension pots in the form of a 55 per cent tax for those who go over the lifetime allowance.
Chancellor Rishi Sunak introduced the measure to help raise around £1 billion for the Treasury, but it could have a major effect on retirement planners with the sizeable tax being imposed on anyone whose private pension pot value goes over the current lifetime allowance of £1,073,100.
Tristan Hartey, managing director at Hartey Wealth Management, said: “Experts are now reminding Britons that while it may seem unrealistic to many people that they could achieve just over £1 million worth of pension savings, reaching the lifetime allowance may be closer than they think.
“People who have worked hard and have been saving from a very early age and individuals whose career commands them a substantially high salary are counted among those most likely to be affected by the new rules.
“Many UK savers are actually caught out every year, never realising they are at risk, but the tax implications can be drastic. People often end up paying sometimes unnecessarily high levies that they are not expecting.”
Individuals who are concerned about their plans for the future and avoiding significant tax blows often reach out to retirement planning specialists and wealth managers for help. These experts help clients assess resources such as pension pots, ISAs and investments, while offering strategies to limit the amount of tax paid out.
Hartey added: “Here at Hartey Wealth Management, we provide expert advice in all areas of financial planning which includes pensions, savings, investments, life insurance and estate planning. Clients coming to us can rest assured that they are being looked after in every possible area of wealth management.”
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