Are you at Max(imum) Headroom?! If you are considering retirement in the next few years then FT&A Finance warn that you must consider a ‘headroom check’. Like the vast majority of dentists, you are probably not aware of the Standard Lifetime Allowance? In April 2012 the Standard Lifetime Allowance (LTA) for pensions was reduced from £1.8 million to £1.5 million. This means any pension assets held on retirement exceeding £1.5 million will be taxed at 55%. This has sparked a necessity for higher earners nearing retirement to perform what is known as a Headroom Check to make sure that their level of pension contributions won’t take them over the £1.5million and incur a large tax bill on retirement. Dino Charalambous of FT&A Finance explains, “£1.5 million isn’t as huge and uncommon a figure as you might expect. Where this can really have an effect is when a dentist receives an NHS pension. A specialist advisor (who really understands dentistry) will be able to advise on effective financial planning to minimise the effects. A range of solutions including taking your NHS pension enhanced cash lump sum or contributing to ISAs can be deployed.” If you are nearing retirement (or even if it’s some way off yet), it is always best to be prepared and know where you are at. Call FT&A Finance on 08456 123 434 for some helpful advice.
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