Did You Know - Autumn 2009

Pension age changes for the over 50’s and income tax changes in the tax year starting April 2010.

Pension rules tend not to change much time. You set a date for when you want to get out of the rat race and build a pot to meet the specifications you have set. For some, the age they set is 60 plus and for others it is early as 50. It is this last group that this information note focuses on. You may have seen a similar note on our Blogspot.

A pension rule change is due to occur on 06th April next year (2010) where the minimum retirement age is increasing from 50 to 55. For those born around 1959 or before (to around 1956) this could cause a problem if their dream was to enter retirement in their earlier years.

Many clients and enquirers have contacted us to discuss this issue to see if any changes need to be made at this point. For some, the change is to extend their expectations to 55 and beyond. For others, the changes required may be significant. This is a significant change and follows the changes to ISA allowances for the over 50’s this tax year (2009/2010).

Other changes that are also on their way from a pension and income tax point of view in the new tax year (06th April 2010) are changes to the income tax rules. These are detailed as follows:

For reference, in his Budget on 22 April 2009, the Chancellor announced changes to the income tax system which are focused on individuals with the highest incomes.

From April 2010:

• the additional rate of income tax will be 50% on income over £150,000, with a rate of 42.5% for dividends; and

• the value of the personal allowance will be restricted for those with incomes over £100,000, tapering down to zero.

These changes replace the 45% income tax rate and the two-stage taper of the personal allowance announced in the 2008 Pre-Budget Report.

If these changes effect you, then taking independent financial advice now may help you to ensure that you are prepared for the changes ahead. We look forward to speaking to you soon.
 

This should not be seen as individual advice and you should seek independent financial advice before making any changes to your plans. Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.