Tax treatment of Purchase Life annuities
(October 2011)
The taxation of a Purchase Life Annuity is complex and unique amongst other investments. This is because the income comprises of 2 elements - a return of capital and an investment return.
The return of capital element is described as the capital content and is free of income tax. The element arising from the investment returns is known as the interest element and this part is subject to income tax.
The actuarial work behind the calculation of each element is complex and proprietary but this note explains the principles and reasons behind the calculations. Download here.
Protection against the lifetime allowance charge
(January 2011)
An explanation of the how the lifetime allowance was introduced and how a change in political will means the effect will be felt by an ever increasing number of pension savers. This note explains the mechanism for protecting your clients against the charges, including the “Fixed Protection” being introduced in 2012. Download here
Taxation of pension death benefits
(January 2011)
Leaving an inheritance to loved ones has always been a key area of financial planning. With a pension fund often being your clients’ second largest asset, it is important to appreciate the implication of the tax charges that apply to pension money. By combining the two certainties of life identified by Benjamin Franklin, this note gives a clear explanation of the tax charges applicable on pension funds when the scheme member dies, both before and after retirement. Download here.
New rules for income drawdown
(January 2011)
This note gives an “At to Glance” comparison on the rules for income drawdown before and after A-Day and details of the new rules after April 2011 when the requirement to annuitise by age 75 is removed. It includes explanation of the rules allowing unlimited withdrawals and the minimum income requirement. Download here.
Annuitising Section 32 Policies including GMP
(February 2011)
Although S32 policies will guarantee to provide the GMP, options to retire early or receive a tax free lump sum may be curtailed by less than expected investment returns. This note demonstrates how the use of enhanced annuities could allow your clients to increase income, retire early, increase the tax free cash, or a combination of all 3. It also gives good reason for avoiding the obvious option of converting GMP to Protected Rights. Download here.