THERE are significant changes to UK pensions being implemented from April 2015. These follow positive changes already implemented this year; including the ability to take small pension pots as cash, up from £18,000 to £30,000. Also a 25 per cent increase in income from drawdown personal pensions (and QROPS), to counteract historically low annuity rates.
The key headline grabber from April is the ability to withdraw as much of your pension pot without restriction as you wish. The income is taxable in the UK, however residents of Spain may avoid this tax, but do need to declare personal pension income here.
Changes to annuities have also been announced, with decreasing annuities and an extension of the guaranteed annuity period beyond 10 years, both are positive measures allowing greater planning.
Further complimentary changes have just been announced removing the current 55 per cent death tax for non-dependants on drawdown pensions in payment and for those over 75.
A post-75 death benefit tax remains at a reduced rate of 45 per cent. However non-UK residents can consider the benefits of an offshore pension (QROPS), where benefits potentially pass tax-free to non-dependents.
We are still awaiting more detail in terms of the operational elements of how the new rules will work in practice and these are expected to be announced in the government’s autumn statement on 3rd December, so watch this space.
The Labour party has already voiced concerns at the measures meaning there could be more restrictive rules implemented post-election. Irrespective of the election outcome the changes are coming (even if potentially for a short period) and individuals are well advised to review their options to ensure opportunities are not missed, which could have significant implications for pensions in payment and/or future pension expectations.
Because of the complexities, it is recommenced that professional advice be sought from a UK qualified company who can offer advice to UK standards of regulation and disclosure. The Fry Group are a UK Chartered Financial Planning company providing UK pension and investment advice to expatriates living in Spain. For further information contact Mark Davies. [email protected] Tel – 952 768 450.