Paying into pension when over LTA

mark55man

I think 6 is more about persuading your company to pay you salary instead of contributions.


but the link posted above suggests for legacy building out of IHT reach pensions is the way to go

EdSwippet

ManMadeWays wrote: »

3. I also want to continue to earn to help my children get on the property ladder indeed the Tax Free lump sum will become property deposits

Just FYI, the LTA is a de facto limit on the tax free lump sum. No matter how much you build up in a pension, you can never realise more than 1/4 of the applicable LTA as a tax free lump sum. In fact, one way of looking at the LTA is that below it you can take 25% of the balance as a tax free lump sum, and above it the government takes all of that 25% for itself instead.

kidmugsy

The only problem with the IHT argument is that the favourable IHT provisions seem to me unlikely to survive long. A Corbyn government is almost bound to swipe a fair chunk of the money. I could imagine a Conservative government taking a chunk too, if only as part of a wider reform of inheritance taxes.

In spite of years of vacuous talk about austerity, there hasn't really been any worth mentioning - the state continues to pocket an unholy proportion of household income, and it's unlikely to get any smaller soon.

The search for new stuff to tax will continue, and wealth - as distinct from income - is a tempting target, especially wealth that's hard to shift abroad. So everyman's pension and house will be in their sights.

It may still be worth the gamble that some advantage will adhere to pension wealth, but be prepared for disappointment.