News in brief
Alternatively Secured Pensions
The Government has confirmed that a 70 per cent "unauthorised payments" charge is to be levied at death on all Alternatively Secured Pension (ASP) funds not used either to provide a spouse's pension or as a charitable donation.
ASPs, introduced as part of the April 2006 pension reforms, allow people over 75 to keep their pension invested while drawing an income from it, as an alternative to the normal requirement to buy an annuity income.
The schemes were designed to help those with a religious objection to annuity purchase, but they caused great excitement among people who wanted to pass on pension savings to their heirs. Because ASPs allowed for a member of the same pension scheme to inherit your pension fund, the concept of "Family SIPPs" sprang up, allowing groups of pension savers to set up linked but separate pension pots with the same provider. At age 75 each SIPP could be converted to ASP status, leaving the fund invested and - importantly - inheritable.
The Government has now stamped on this, as well as on people trying to get round the death taxes by setting up family SSASs (another type of pension scheme.)
However, there could still be benefits for those people who want to continue managing their own funds or to vary their income withdrawals rather than being locked into annuity payments.
Budget 2007 also introduced more flexibility on how much income an ASP investor could withdraw, from between 65 and 90 per cent of what you could get from an annuity to between 55 and 90 per cent.
Pension Term Assurance
Pension term assurance contributions made before April 6 2007 will still qualify for tax relief, as long as the policy was applied for before December 14 2006.
However, policyholders will lose the relief if they change their policy term or sum assured, unless their policy has guaranteed insurability, giving the option to extend cover at certain "life events" such as moving home or having children.
Venture Capital Trusts
Venture Capital Trusts (VCTs) raising money from April 6 2007 are able to invest only in companies with fewer than 50 full-time employees, as a result of changes announced in Budget 2007, and the companies themselves will not be able to raise more than £2m from VCTs in a single year.
The requirement for VCTs to remain 70 per cent invested has been relaxed to allow them to sell their successful investments without risking their tax-efficient status.
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This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Your home may be repossessed if you do not keep up repayments on your mortgage.
Article date: 03.07 |
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