High earners need to act to reduce a damaging tax bill, particularly those with buy-to-let rental income, when the pension lifetime allowance comes into effect on 6 April 2016, warns Darren Laverty, partner at employee benefits specialist, Secondsight
There are radical changes to pension schemes being introduced by the government from 6 April 2016 that could leave high earners with unexpected and unwanted tax bills of up to £13,500 and many more employees hitting the lifetime allowance ceiling if they do not take action before the changes come into force.
From 6 April, the annual allowance will be tapered from £40,000 for those with earnings of £150,000 or less to £10,000 for those with earnings of £210,000 or more. While this will mostly apply to high earners, some people earning below £150,000 may also be affected.
The reason for this is that no longer are earnings just comprised of someone’s salary. They will be ‘adjusted’ to include employer pension contributions or any other income, including salary sacrifice, commission, income from a pension and now it also includes any other taxable income including savings and investments, and employee’s buy-to-let property income.
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