Top earners could be hit with unexpected tax bills

Top earners could be hit with unexpected tax bills following new pension rules in April and more employees will hit lifetime allowance if they don’t take action now

Radical changes to pension schemes being introduced by government from 6thApril 2016 could leave high earners with unexpected and unwanted tax bills of upto £13,500 warns Secondsight, the employee benefits specialist, which is partof Foster Denovo Limited.

Another major change is the reducation in the lifetime allowance from £1.25m to £1m.  After April 2016, anyone who breaks through the £1m threshold may be liable to 55% tax on any amount over the limit if the excess is taken as a lump sum.

An unintended consequence of these changes is that most ‘death in service’ benefits paid out will count toward the £1m – a factor which could leave a bereaved family with less than half of any expected pay out, once the tax is taken.

Darren Laverty, Partner at Secondsight says “From now until April, Employers have a window of opportunity to communicate the pension changes to their employess, educate them on their options and take action to protect them from the impact of these changes.”

Read the press release in full here.