AWD Chase de Vere warns execs on hidden pension related taxes |
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| Tax | |
| Written by Gary Howes | |
| Wednesday, 03 February 2010 | |
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Senior executives could face an additional tax bill of £15,000 per annum.
AWD Chase de Vere, an Independent Financial Adviser, has today warned that senior executives are not aware that they could pay up to tens of thousands of pounds in extra tax on pension contributions made by their employer. The 2009 Budget announced that income tax relief on pension contributions would be reduced for those earning over £150,000 per annum and those earning over £180,000 would receive only 20 per cent relief. In practice, this means they will be personally liable for an additional 30 per cent tax on contributions made on their behalf by their employer. As an example, an individual benefiting from an annual £50,000 employer’s pension contribution could face an additional tax bill of £15,000 per annum. Param Basi, Technical Director, AWD Chase de Vere, says: “Many high earners are not aware that this additional charge is coming and it will be a real shock for them. They will have to pay the tax charge even though they will see no extra money in their pay packet and will not be able to access their pension savings until they start taking benefits. In one recent example we had to tell a senior employee that he would be hit with an unexpected tax bill in excess of £40,000 if he did nothing. “We’re urging all high earners who receive pension contributions from their employer to take independent financial advice now. April 2011 may seem a long way off, but these high earners need to start re-organising their personal finances and/or speaking with their employer or else there will be onerous tax consequences.”
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