An estimated 30,000* individuals, including many NHS dentists with pension benefits valued at more than £1.25m, are likely to benefit from HMRC’s Individual Protection from today (18 August). Dentists with NHS pension ‘added years’, personal pensions and those with deferred benefits can also take advantage of the newly available protection.
By having Individual Protection you are able to set your Lifetime Pension Allowance (LTA) up to a maximum of £1.5m, potentially saving a tax charge of £137,500. HMRC is offering the protection as a lifeline for those affected by the £250,000 reduction to the LTA in April 2014. The application 'window' stretches to April 2017, although those looking to retire before then are advised to take action now.
Jon Drysdale, an independent financial adviser at PFM Dental says: "Dentists retiring within the next 12 months need to deal with this issue immediately or face potentially large penalties. Getting the necessary figures at short notice from NHS Pensions will be a challenge, so seeking specialist advice early on is paramount."
Unlike Fixed Protection 2014, the new Individual Protection allows the continuation of active pension contributions.
To complete your Individual Protection application you will need to apply to NHS Pensions for a valuation of benefits.
For more information contact pfmdental on 0845 241 4480 or visit www.pfmdental.co.uk
*Source: HMRC Tax Information and Impact Notes 'Reducing the pensions tax annual and lifetime allowances'.