Hooray for A-Day

It’s not often the words pension and excitement go together but for many of our clients the changes in pensions legislation coming in next year will be cause for celebration.

From 6 April 2006 (known as ‘A-Day’) pension rules are going to be simplified, while annual contribution limits and the range of assets available in which to invest will increase greatly.

However, there will be a lifetime limit of £1.5 million and any excess will be taxed heavily. So if you already have a pension fund above this limit, you will need to take action now to protect your position.

Borrowing limits are also coming down after A-Day. Whilst you’ll be allowed to invest in residential property through your pension, you will be able to borrow only 50% of the pension’s value at the time. Alternatively, if you’re thinking of buying commercial rather than residential property through your pension, it may be better to do so before A-Day while the borrowing limits are higher.

Finally, if you are planning to transfer existing residential property into your pension, you must be aware of the Capital Gains Tax and Stamp Duty Land Tax implications.

For further information on the new pension rules, please contact:

Andrew Goldstone
Tel +44 (0)20 7440 7205
andrew.goldstone@mishcon.com