Financial Planner

Samuel Back

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In a landmark moment for the UK's economic landscape, Chancellor Rachel Reeves has delivered her inaugural budget, bringing significant changes that could impact your financial planning and long-term goals.&nbsp; &nbsp;Some changes were expected, as we explored in our <a href="https://www.aventur.co.uk/blog/autumn-budget-2024-predictions">Autumn Budget predictions</a>, and some were more of a surprise. &nbsp;While the full details and impact of the budget are still unfolding, we've analysed and compiled the key policy announcements to explain their potential implications. &nbsp;<h2>Tax for Employees</h2> It was confirmed that in line with the manifesto promise, Labour will not raise any income tax or national insurance for employees. It was also confirmed that fuel duty was frozen, and the temporary 5p fuel duty was retained. &nbsp;Under the Tory government, personal tax thresholds were frozen until 2028 and it was confirmed that from 2028-29 personal tax thresholds will be uprated in line with inflation once again. &nbsp;<h2>Capital Gains Tax (CGT)</h2> It has long been suspected, and hinted at through the wording from the election onwards, that one of the taxes that would see a substantial rise was <a href="https://www.gov.uk/government/publications/changes-to-the-rates-of-capital-gains-tax/1cf25453-5b0c-4e7b-9165-65cf117e0af0">CGT</a>. &nbsp;The chancellor confirmed an increase in the rate paid by basic-rate taxpayers from 10% to 18% and from 20% to 24% for a higher/additional rate payer from 30th October. &nbsp;Example: If you held an investment that you had purchased for £100,000 that increased in value to £150,000, you would have a £50,000 gain. &nbsp;Individuals benefit from a capital gains allowance of £3,000, and therefore £47,000 of the gain would be subject to CGT. &nbsp;Under the previous rules, the tax on this would be £4,700 for a basic rate taxpayer or £9,400 for a higher/additional rate taxpayer. &nbsp;Following this rule change, the CGT liability would increase to £8,460 for a basic rate taxpayer or £11,280 for a higher/additional rate taxpayer. &nbsp;<h3>Potential financial planning solutions</h3> There are a number of potential planning ideas that could be utilised to mitigate CGT hikes: &nbsp;<ul><li>Timing of asset sales in line with wider plans &nbsp;</li><li>Making use of spousal allowances &nbsp;</li><li>Utilising tax-advantaged investment schemes &nbsp;</li></ul><h2>Pensions</h2><h3> Pension Tax Advantages</h3> It was pleasing to see that the tax-free cash entitlement of up to 25% was maintained and the speculation around the removal of higher rate tax relief on contributions turned out to be untrue. &nbsp;<h3>New Changes to State Pensions</h3> Basic and new state pension payments will go up by 4.1% next year as Labour have stuck to their commitment to maintain the "triple lock". This will see a full state pension entitlement increase to £11,975.60 annually, an increase of £473.<h3> Pensions and Inheritance Tax (IHT) Changes</h3> It was confirmed that pensions passed on will be subject to IHT from 2027. &nbsp;Most pensions are currently exempt from IHT and not classed as part of your estate when you die. This makes them under the previous rules, a particularly effective IHT planning vehicle. &nbsp;This is also coupled with an IHT threshold freeze until the next election. &nbsp;Example: &nbsp;This is potentially going substantially impact a lot of individuals across the UK. &nbsp;An example of a household impacted by this may be as follows: &nbsp;<ul><li>Home - £500,000 &nbsp;</li><li>Cash - £50,000 &nbsp;</li><li>Chattels - £25,000 &nbsp;</li><li>ISAs - £100,000 &nbsp;</li><li>Pensions - £500,000</li></ul> With pensions outside of the estate, there would be no IHT liability for this household assuming the family home is left to direct family members. &nbsp;As a result of the changes to the budget, the estimated impact would be an IHT bill of £70,000. &nbsp;<h3>Potential financial planning solutions</h3> There are a number of potential planning ideas that could be used in the above circumstance: &nbsp;<ul><li>Using comprehensive cashflow modelling to understand how much is ‘required capital’ and looking at how gifts can be made directly to family members &nbsp;</li><li>Looking at trust planning to reduce IHT &nbsp;</li><li>Considering Expression of Wishes and the planning opportunities for Pension &nbsp;</li><li>Death Benefit Trusts &nbsp;</li><li>Drawing monies from the pension and mitigating the resulting liability / continued IHT liability through tax-efficient investment structures &nbsp;</li><li>Taking monies from the pension scheme to fund insurance policies paid into trust &nbsp;</li></ul>The movement of pensions into the scope of IHT will undoubtedly impact the financial planning of many and will require changes to long-term financial plans. However, as shown above, there are a number of wealth management strategies that we will be able to utilise to mitigate this. &nbsp;<h2>Alternative Investment Market (AIM) shares</h2> For individuals wanting to mitigate IHT whilst retaining access to capital, especially for ISA funds, a common strategy was to invest the funds into AIM market shares, which often held a 100% exemption from IHT. As a result of the rule changes, these will now benefit from a reduced 50% discount. Whilst this remains worthwhile considering given that it takes the effective IHT rate from 40% to 20%, it certainly becomes less appealing. &nbsp;<h2>Business Asset Disposal Relief</h2> <a href="https://www.gov.uk/business-asset-disposal-relief">BADR</a> would be kept at £1m, and would remain at 10% this year, rising to 14% in April 2025 and 18% in 2026-27. For those selling businesses or liquidating their company, this could mean a potential increase in the tax liability of the business sale of £80,000.&nbsp;<h2>Continuation of VCT/EIS legislation</h2> Aventur's holistic financial planning service provides the opportunity to optimise tax advantages investments as Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS). &nbsp;These offer 30% tax relief on investments made and a whole host of other advantages from It was confirmed that these will remain in place until 2035. &nbsp;<h2>Private School Fees and VAT</h2>Somewhat controversially VAT is set to be introduced to private school fees from January 2025, meaning tuition and boarding fees at independent schools will be subject to a 20% VAT charge.&nbsp; For those affected, this additional expense will likely require adjustment to long-term financial plans. &nbsp;Further information about the VAT charge for Private School fees can be found <a href="https://educationhub.blog.gov.uk/2024/11/01/vat-private-schools-everything-you-need-to-know/">here</a>, with additional information likely to be released closer to the January deadline. &nbsp;<h2>Stamp Duty Increase</h2> Stamp Duty was announced to increase for second homes, from 2% to 5% from 31st October. Homes in the purchase process that are set to complete after this date will likely be subject to the new rates. Information around the new rates and who is likely to be affected can be accessed <a href="https://www.gov.uk/government/publications/stamp-duty-land-tax-increase-to-the-higher-rates-of-stamp-duty-land-tax-and-to-the-single-rate-payable-by-non-natural-persons/380cf2b3-cc05-4457-9624-224485c29fb5">here</a>. These budget announcements present both challenges and opportunities for more strategic wealth management. And while the impact of these announced changes may seem unsettling, informed planning could be the best defense for many.&nbsp; One thing is clear though, and that is that the budget's complexities will require truly personalised advice. Our team of financial experts are ready to:<ul><li>Analyse your specific financial situation</li><li>Develop tailored strategies</li><li>Mitigate potential tax impacts</li></ul> <a href="https://www.aventur.co.uk/contact">Get in touch today</a> to discuss your current financial plans or for more information about how the budget could affect your plans. &nbsp;<hr>*Information correct at the time of publishing. This article is provided for information purposes only and should not be taken as individual advice. Aventur is not responsible for the content of 3rd party websites.

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Autumn Budget Key Points: How Will your Finances be Affected?

Caroline Wishart-Young

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So, you’ve spent all those years contributing into your pension and now it is time to retire and take an income, but what is the best way to do this? &nbsp;We’ve compared the pros and cons of the two most common options – Drawdown and Annuity – to help you make an informed choice about your financial future and funding your retirement. &nbsp;<h2>What are the key differences of Drawdown vs. Annuity?</h2> Before we dive into the pros and cons of drawdown vs annuity, it's crucial to understand the fundamental difference between them. &nbsp;The key difference lies in flexibility versus certainty. <a href="https://www.investopedia.com/terms/d/drawdown.asp#:~:text=A%20drawdown%20refers%20to%20how,a%20measure%20of%20downside%20volatility.">Drawdown</a> typically offers more control over your money, but it comes with ongoing responsibility and risk. Where <a href="https://www.investopedia.com/terms/a/annuity.asp#:~:text=Annuities%20are%20financial%20products%20that,sum%20payment%20or%20periodic%20payments.">an annuity</a> provides guaranteed income but lacks flexibility once set up. &nbsp;Let’s take a look at the pros and cons of each in more detail below. &nbsp;<h2>Pension Drawdown: Flexibility in Retirement Income</h2> Think of drawdown as keeping your pension pot invested while taking income from it. It's like having a savings account that you can dip into as needed. Your money remains invested in the market, potentially growing over time, but also subject to market fluctuations. &nbsp;<h3>The Pros of Choosing Pension Drawdown &nbsp;</h3><ol><li>Flexibility: As mentioned, drawdown gives you the option to increase or decrease your level of withdrawals depending on your income requirements at the time and change how often you receive the payments.&nbsp; You also have the option to take additional lump sums from your pension if they are needed. However, this can reduce how long your pension will last for and will also be subject to tax. &nbsp;</li><li>Inheritance: In the event of your death, any pension funds left over can be passed to your chosen beneficiaries , which can help loved ones financially in the future, and by completing an Expression of Wish, you’ll have peace of mind knowing that the funds have been left to those who you have chosen. &nbsp;</li><li>Growth: As your pension funds remain invested whilst you are withdrawing the money, growth can still be achieved to help prolong the length of time the income can be paid. However your investment views, circumstances, objectives and markets themselves on could change, so an ongoing assessment of your current investment strategy is essential.</li></ol><h3> The Cons of Pension Drawdown &nbsp;</h3><ol><li>Investment Risk:&nbsp;Your pension funds remain invested, this means that the value of the funds can go down, so you could end up losing some of your money.&nbsp; This approach is why it is good to have a Financial Adviser looking after your investments so you can have peace of mind that an expert is looking after this for you. &nbsp;</li><li>Longevity Risk: when in drawdown, there is a chance that you could outlive your pension money, meaning you will have a shortfall in the income you need during retirement. This can happen if you are drawing too much money out for the size of the pension pot you have. With a financial adviser they can help reduce the chances of this occurring, by working with you to plan your cash flows and spending needs to help you understand how sustainable and secure your retirement is. &nbsp;</li></ol><h2>Annuities Explained: Guaranteed Income for Life</h2> An annuity, on the other hand, is more like trading your pension pot for a regular pay-check. You give your pension savings to an insurance company, and in return, they promise to pay you a fixed income for the rest of your life, regardless of how long you live. &nbsp;<h3>The Advantages of Pension Annuities &nbsp;</h3><ol><li>Security:&nbsp;With an annuity you get a guaranteed income for life, meaning that you have a reliable income source for your lifetime; so you know exactly what is going to be received each month, no matter what.&nbsp; &nbsp;</li><li>Simplicity: No matter what is happening in the market, your income from the annuity will not change as it is a fixed amount and is not linked to any investments. &nbsp;</li><li>Increased Income Option:&nbsp;When applying for an annuity, make sure to disclose any health conditions as you may be eligible for an enhanced annuity if you have a condition which affects your life expectancy. &nbsp;</li></ol><h3>The Disadvantages of Annuities &nbsp;</h3><ol><li>Lack of Flexibility:&nbsp;When you purchase an annuity, the income is for your lifetime so there is no way to make any changes to it once it is in force.&nbsp; This means that future income needs will have to be sourced from elsewhere. &nbsp;</li><li>Inflation Risk:&nbsp;Inflation can mean that your fixed income amount could struggle to keep up with the increasing cost of day-to-day expenses.&nbsp; You can choose an annuity option which helps protect against this, but it may mean the annual amount you can get is less. &nbsp;</li><li>Limited Inheritance: In the event of your death the income payments do not pass onto any beneficiaries, they just stop.&nbsp; You can choose an option with a spousal or dependents benefit, but again this may mean the annual amount that you can get is less. &nbsp;</li></ol><h2>Key Factors to Consider when choosing Drawdown or Annuity</h2> It’s clear that there is many factors to consider when it comes to taking your pension income, speaking with a Financial Adviser can help you understand which option is the right one for you, and what you can do to achieve your desired income in retirement. &nbsp;Choosing between drawdown and annuity isn't just about the numbers – it's about your lifestyle, risk tolerance, and legacy goals.&nbsp;&nbsp;Drawdown offers flexibility and growth potential but requires ongoing management, whilst annuities provide certainty but at the cost of flexibility.&nbsp; &nbsp;<h2>Choosing the best option for Retirement &nbsp;</h2>You don't have to navigate this crucial decision alone. Our experienced financial advisers are here to help you create a personalised retirement strategy that aligns with your unique needs and goals.&nbsp;For more help planning your retirement, visit our <a href="https://www.aventur.co.uk/service/retirement">planning your retirement page</a>. &nbsp;<a href="https://www.aventur.co.uk/contact">Contact us today</a> to schedule a pension review and take the first step towards a secure and fulfilling retirement. The first meeting is always at our expense!

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Pension Drawdown vs Annuity: Which is Best?

Navigating the world of pensions and retirement planning can be complex, but it's a crucial part of <a href="https://www.aventur.co.uk/blog/your-guide-to-estate-planning">securing your financial future</a>. &nbsp;Many of our clients ask us about the benefits of making regular pension contributions especially with saving rates being at their highest level for many years.&nbsp; &nbsp;For example, is it a good idea to pay into a Cash ISA offering a guaranteed return of 4% over a pension holding investment funds?&nbsp; &nbsp;While funds can be volatile and may indeed see a loss over the time period of the ISA interest rate offered, a secure 4% return is tempting to many (although it is worth noting of course that pensions can also be invested into cash deposits). &nbsp;And whilst a comprehensive financial plan will usually involve a range of savings, investments and other assets, pensions have some key benefits that are worth examining. &nbsp;Let’s look at examples for both a work-based scheme and your own private pension below, to give you an idea of how your contributions could enhance your pension.&nbsp; &nbsp;*Note that all examples relate to taxpayers in England, Wales or Northern Ireland and refer to defined contribution scheme investment, and figures and information are correct at time of publication. &nbsp;<h2>Private pension contributions and tax relief</h2> One key advantage is that if you make a personal pension contribution within your personal allowance, you’ll receive immediate tax relief at your marginal rate.&nbsp; &nbsp;An example of this would be: &nbsp;For an individual not earning an income, you’ll receive a 20% tax relief payment into your pension based on the first £2,880 you pay in.&nbsp; &nbsp;This means you’ll make a gross investment of £3,600. &nbsp;If you are a basic rate taxpayer, then you’ll receive a tax relief payment of £20 for every £80 you pay in. This would be the equivalent of investing £100 for every £80 from your bank account! &nbsp;An added bonus of this is that claiming the tax relief is normally done for you by your pension provider.&nbsp;If you pay Income Tax above 20%, you can claim even more tax relief using your self-assessment tax return. Here, an individual would be able to claim: &nbsp;<ul><li>20% up to the amount of any income you have paid 40% tax on &nbsp;</li><li>25% up to the amount of any income you have paid 45% tax on &nbsp;</li></ul>You can complete a self-assessment via the&nbsp;<a href="https://www.gov.uk/self-assessment-tax-returns">HMRC self-assessment website</a>, through an accountant or by writing to HMRC to claim if you pay income tax at 40%. &nbsp;Let’s look at the following example of how this would affect contributions: &nbsp;Let’s imagine that ‘Individual A’ earns £60,000 in the 24/25 tax year and pays 40% tax on £9,730 (where the annual allowance for a basic rate taxpayer is £50,270, so the £9,730 is the excess &nbsp;and therefore subject to the 40% tax).&nbsp;&nbsp;They could then put £15,000 into a private pension to automatically get tax relief at source on the full £15,000. &nbsp;‘Individual A’ could then also claim an extra 20% tax relief on the £9,730 (the same amount they paid higher rate tax on) through their Self-Assessment tax return. &nbsp;They would not however, get additional relief on the remaining £5,270 they put into their pension. &nbsp;Overall, this means ‘Individual A’ would have made a total investment of £18,750 at a net cost of £13,054! &nbsp;The tax relief on contributions (amongst others!) means that pensions can be a great way to invest for your future. &nbsp;<h2>Work-based scheme pension contributions&nbsp;</h2> Let’s now consider contributions into a workplace pension scheme. There are many different workplace pension providers including&nbsp;<a href="https://www.nestpensions.org.uk/schemeweb/nest/about-pensions/why-save-with-a-workplace-pension.html">Nest</a>,&nbsp;<a href="https://www.royallondon.com/pensions/workplace-pensions/">Royal London</a> and&nbsp;<a href="https://www.aviva.co.uk/business/workplace-pensions/">Aviva</a>. &nbsp;Auto-enrolment legislation introduced in 2012 means that workers need to manually opt out of their work pension scheme. Since introduction of this legislation,&nbsp;<a href="https://www.gov.uk/government/statistics/workplace-pension-participation-and-savings-trends-2009-to-2023/workplace-pension-participation-and-savings-trends-of-eligible-employees-2009-to-2023#:~:text=The%20workplace%20pension%20participation%20rate,pension%20(up%200.4%20million).">more UK employees than ever are paying into their workplace pension scheme</a>.&nbsp; &nbsp;A workplace pension will certainly help with later life living, especially when the future of the state pension is subject to review. &nbsp;We have already seen the state pension age rise for both men and women, and this is due to rise again between 2026-2028 and further still between 2044-2046.&nbsp; &nbsp;It is also anticipated that retiring early (or at least comfortably!) is unlikely to be sustainable without a good level of personal pension wealth.&nbsp;&nbsp;The long-term thought is that the state pension will never be a means tested benefit but with the age rising to 68 by 2024, it is showing signs that sustainability is going to be difficult with the growing age of the population. &nbsp;When looking at your pension planning, a good place to start is with your workplace scheme.&nbsp; Not only do you receive the tax relief on your own contributions, but your employer will also be paying into the scheme.&nbsp;For someone ready to start their pension journey this is a great way to boost your retirement, as many employers match your contributions up to certain levels. &nbsp;It is true that your future pension income will be taxed at the marginal rate when you retire, and for many individuals this will likely be at the basic rate.&nbsp; &nbsp;But don’t forget that under current rules you are also able to take 25% of your pension tax free.&nbsp; &nbsp;This does still mean that a good portion of your pension will be taxable, but if you are able to save over many years, the tax relief you have received will also form part of your potential growth.&nbsp; &nbsp;Should someone start saving for their pension at their first opportunity, their savings are likely to see over 50 years of investment. And, whilst growth can never be guaranteed, this should, with careful advice, see a secure retirement.&nbsp; &nbsp;It may seem early, but a worthwhile exercise is to calculate what sort of income you need in retirement.&nbsp;&nbsp; &nbsp;<h2>How much will you need to save for retirement?</h2> Begin by assessing your total outgoing and allow for things like holidays, emergencies and your desired lifestyle, as this can help with seeing how much your private pension will need to be. &nbsp; &nbsp;The full state pension is currently £11,502 a year (the full basic state pension is £8,814 per annum), so additional retirement income from a private pension will likely be needed &nbsp;A married couple earning the full state pension with no other income sources would generate almost £2,000 per month.&nbsp; &nbsp;So, saving just £100 per month with even just annual growth of 2% for 50 years would be worth over £100,000 over the long-term, and having a pension fund paying an annuity (an income for life based on the size of your pension pot) or flexibly would mean a more secure retirement. &nbsp;<h2>Potential Pension changes in the 2024 Autumn Budget</h2> At the time of writing, there is a potential for tax relief to change on the pension contributions in the 2024 Autumn budget. Currently, a significant portion of tax relief (estimated at 56%) is at the higher rate. For more on this topic, why not read our <a href="https://www.aventur.co.uk/blog/autumn-budget-2024-predictions">Autumn Budget 2024 predictions</a>. &nbsp;Reducing the relief to a flat 20% would represent a considerable tax saving for the government but would be extremely unpopular amongst savers.&nbsp; &nbsp;It is possible that reduction from the 40% may be announced, so it may be worthwhile considering a lump sum payment before any new legislation is brought in. &nbsp;As discussed, when it comes to your retirement, having a range of investments, savings, property and additional assets is desirable, but it is also clear that contributing into a pension in any capacity should form an important part of your financial planning.&nbsp; &nbsp;If you’re ready to take the next step, why not schedule a consultation with our&nbsp;financial experts to discuss your unique retirement goals and explore the best pension options for you.&nbsp; <a href="https://www.aventur.co.uk/contact">Contact us today</a> so that our team can help you: &nbsp;<ul><li>Assess your current pension situation. &nbsp;</li><li>Identify potential gaps in your retirement plan. &nbsp;</li><li>Develop a personalized savings strategy. &nbsp;</li><li>Maximise tax benefits and optimize your contributions. &nbsp;</li></ul><hr>*Capital at Risk. The value of investments can go down as well as up and you may not get back the full amount you invested.

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Maximising Your Retirement: A Guide to Pension Contributions and Tax Benefits

<h2>Understanding the new Pension Changes &nbsp;</h2>The big news in Jeremy Hunt’s 2023 spring Budget was the unexpected abolition of the Lifetime Allowance (LTA) charge. The complete abolition was certainly not one that I had on my budget bingo scorecard!&nbsp; &nbsp;Until the budget, the LTA stood at £1,073,100, an all-round relatively unstable figure that had been increased, decreased and frozen before it was eventually scrapped. &nbsp;<h2>What was the LTA and why was it scrapped? &nbsp;</h2>By way of a reminder, the aim of the LTA was to limit the amount of tax-privileged benefits that can be accumulated by an individual across all of their pensions. This change will come into affect on the 6th April 2024. &nbsp;It was calculated and tested when benefits are drawn (or at age 75 if earlier) which is a ‘benefit crystallisation event’. &nbsp;These benefit crystallisation events would use up all or part of the LTA and once the limit had been reached, the payment of any additional benefits will give rise to a tax charge.&nbsp; &nbsp;The rate was 25% for income payments subject to a marginal rate of tax, and 55% for lump sum capital payments. &nbsp;With the LTA charge being abolished, pension savers need no longer worry about the overall value of their pension in this context.&nbsp; &nbsp;Labour has previously said it will reinstate the lifetime allowance, although there is no publicised plan as to how exactly they would go about this.&nbsp;&nbsp;We of course are now likely in an election year, it is hard to imagine the electoral winner completely scrapping these detailed new rules, although further tweaks are always a possibility (and going off the LTA since 2006, very likely!). &nbsp;<h2>What are the new pension allowances? &nbsp;</h2>So, what does this mean for individuals? Are we now… unlimited? Well, unfortunately not! &nbsp;There are effectively now three new allowances to consider: &nbsp;<ol><li>Lump Sum Allowance (LSA) &nbsp;</li><li>Lump Sum and Death Benefits Allowance (LSDBA) &nbsp;</li><li>Overseas Transfer Allowance (OTA) &nbsp;</li></ol><h3>Lump Sum Allowance (LSA) &nbsp;</h3>The standard lump sum allowance (the 25% element you can take tax-free) will now be capped at £268,275 with no provisions in legislation to increase this. As the mathematicians reading may have noticed, this is 25% of the old LTA so there is effectively no change in the amount of tax-free cash that can be taken.&nbsp; &nbsp;Those with LTA protection will be given an LSA based on their protected LTA, although treatment of transitional protections will be another separate blog post so watch this space! &nbsp;<h3>Lump Sum and Death Benefits Allowance (LSDBA) &nbsp;</h3>The standard lump sum allowance (a cap on the tax-free death benefits available from a pension) will now be capped at £1,073,100 with no provisions in legislation to increase this. As with the LSA, those with protection will have their LSDBA set in line with their LTA protection.&nbsp; &nbsp;The implementation of the LSDBA does not mean an increase in tax payable on pension benefits on death where the pension benefits have not yet been crystallised compared to the rules under the LTA.&nbsp; &nbsp;This is because prior to 6 April 2023, a 55% LTA tax charge would have applied to the value of any excess uncrystallised funds lump sum death benefit over an individual’s available LTA. Now that the LTA tax charge has been removed, any excess uncrystallised funds lump sum death benefits will be subject to Income Tax at the beneficiaries’ marginal rate (up to 45%). &nbsp;<h2>What does this change mean for you? &nbsp;</h2>It will have a detrimental impact for any individuals who die before age 75, have crystallised funds in excess of their LSDBA where they have already drawn some of their pension benefits.&nbsp; &nbsp;Under the old LTA rules, the value of crystallised pension benefits in drawdown, or flexi-access drawdown, or as a dependant’s annuity, are not tested against the LTA on death and can be passed on to completely tax free.&nbsp; &nbsp;From 24/25 tax year onwards, should an individual pass away before age 75, the value of their pension benefits on death will be tested against the LSDBA and any excess will be taxed at the beneficiaries’ marginal rate of income tax.&nbsp; &nbsp;<h2>What might change in the future? &nbsp;</h2><h3>Overseas Transfer Allowance (OTA) &nbsp;</h3>This one will impact a lot less of us than the LSA/LSDBA, but worth noting.&nbsp; &nbsp;Largely noticed by those of us who have specialised in pensions for some time, the BCE 8 test is now being substituted with the OTA.&nbsp;The OTA is linked with an LSDBA and the existing overseas transfer charge (OTC). Any transfer to a QROPS exempt from the current OTC will undergo test against the OTA, and any surplus beyond the allowance will incur the overseas transfer charge, currently set at 25%. &nbsp;<h2>Conclusion &nbsp;</h2>The above is a welcome change to many with large pension funds or plans to accumulate them, but as with any legislative change – there are several nuances that are important to be aware of and bespoke advice on your specific circumstances is important in ensuring that you take advantages of the opportunities available.&nbsp; &nbsp;To speak to one of our team about the LTA and how you can navigate the changes, <a href="https://www.aventur.co.uk/contact">send us a message</a>. &nbsp;<hr>Sourceshttps://www.gov.uk/government/publications/lifetime-allowance-guidance-newsletter-march-2023/lifetime-allowance-guidance-newsletter-march-2023

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