A report in the FT this week revealed that 90,000 savers have stopped putting money in their pensions to avoid a hefty tax bill on pensions worth over 1 million.
The news will come as a further blow to anyone hoping for a comfortable retirement and follows a succession of new tax rules that seem to penalise savers and investors looking to maximise their retirement income.
Pensions and savings have already come under pressure in recent years due to a combination of low interest rates and poor performance in the stock markets. Investors hoping that property investment would provide a better return have also been hit by new stamp duty rules and cuts in mortgage interest tax allowances.
The lifetime allowance which is what can be saved into a pension and gain tax relief has been reduced from £1.8m to £1m according to the FT. Anything over the 1 million threshold will lead to significant tax charges.
The cuts in allowances appears to be discouraging many from putting money into pensions to avoid having to pay the tax. The fact that many are decades away from retirement has been described as troubling by analysts.
If you have concerns about pensions and savings and how your tax liabilities might be affected, contact us today.