• SAGE


0161 928 3276



We understand our clients

Protect Your Pension Fund

Newsletter issue - July 08.

The taxation of pensions changed on A Day: 6 April 2006. From that date a cap (the so-called lifetime allowance) was set on the value of a pension fund that can be used to pay out tax favoured pensions, including a tax free lump sum of up to 25% of the fund. On A-day the lifetime allowance was £1.5 million, but it increases every year and is currently £1.65 million.

If your pension fund exceeds the lifetime allowance when you start to draw your pension the excess funds above the cap are taxed at up to 55%. The cap of £1.65 million sounds a lot, but if you have been in an occupational pension scheme for 20 plus years, especially one that has been well funded by your company, your personal pension pot could exceed that limit.

If your pension pot did exceed £1.5 million on A-Day you can register the total value of the fund with the Taxman. That higher registered value becomes your personal lifetime allowance, which increases each year until you retire. The higher personal lifetime allowance protects your pension fund from the 55% tax charge. But you need to get the registration process completed by 5 April 2009 for this protection to apply, so if you haven't already done so, its time to start sorting it out.

You first need to get a valuation of all your pension funds from your various pension companies as the lifetime allowance applies to the sum total of the combined values. As you can imagine it can take months to collect all the necessary information, as some pension companies are very slow to respond. The pension industry estimates that up to 500,000 people could be eligible to apply for pension protection.

As a rule of thumb if you have been a member of an occupational pension scheme for 20 years or so and your highest salary multiplied by the years you've been in the scheme is more than £3 million, then your pension fund could be at risk of higher tax charges. However, the figures for you will depend on how the pension from your scheme is calculated. If you have the annual statements from your pension company we can help you get a rough estimate of the value of your pension fund, before going to the trouble of asking for a formal valuation of the fund.


To work Smarter in your Business Contact Beauchamp Charles

Contact Us

"Join our newsletter for hints, tips and tax advice"


What our clients say

Dakins Property Services

Great Results, Personable, High Integrity

Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

Fredrick Thomas Electrical and Maintenance

We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.