Skip to main content

Thinking of taking your pension as a lump sum?

In March 2014 Chancellor of the Exchequer George Osborne announced several radical changes to the ways you can manage and access your pension. These changes were confirmed in the Taxation of Pensions Bill published on October 14, and will take effect from April 2015.

The new pension rules have been designed to give savers greater control over their money going into retirement. The changes also abolish pension 'death tax', cover free guidance for savers and new restrictions on private pension contributions.
If you are nearing retirement, it is important you take these changes into account.

The biggest change was the proposal to allow individuals aged 55 or above to take the whole of their pension pot as a cash lump sum from April this year.
Currently, although you don’t have to buy an annuity with your pension pot you are not allowed to withdraw it all as a lump sum unless it falls under specific rules governing 'small pots'.  There are a range of options to choose from if your pension fund is not considered a 'small pot'  – including buying an annuity.

If you take all your pension pots as cash, you lose the option of converting them into a regular retirement income – for example, by buying an annuity. Cashing in your pension pots can also affect how much you’ll be entitled to receive in state benefits when retired. For example, if you boost your savings by taking your whole pension pot as a lump sum this may reduce your entitlement to Pension Credit.

We recommend that you take advice before deciding what to do. Also read http://bit.ly/1BVvhrq

If you do decide to take all the 'pot' then investing in a residential property to rent out has to be an option worth considering.

In Ely the average 2 bedroom house is currently achieving rents around £700 pcm. and gives an annual income of £8,400. The purchase price of such a house would be in the region of £180,000. This is a gross yield of 4.67%. If you take out management charges (these are currently allowable against income tax)  for the property at 10% plus VAT then the income falls to £7,392 and the net yield before tax becomes 4.1%.  Compare that with the best performing investments at the moment! The other area to bear in mind is the potential for capital growth in the value of the property although, perversely, this technically reduces your yield.

Maintenance and repairs are currently allowable against tax so boiler servicing etc are tax deductible.
As stated you should take professional advice on matters relating to your pension arrangements but if you need any advice on property matters we are here to help! Talk to the team about house purchase on Ely 665020 or specifically to Robert Mills about lettings and property management.

Comments

Popular posts from this blog

Interesting Rental Market Research

SimplyBusiness.co.uk report on the Changing Face of Britain’s Landlords as Young Entrepreneurs enter the Market Analysis from SimplyBusiness.co.uk has indicated a significant change in both the age and gender of private landlords in the UK. The traditional face of the archetypal British landlord is changing according to the study which shows there is a new, younger breed of landlord entering the private rental market; which would indicate that when it comes to property, many still think that there’s money to be made. Comparative data of landlord insurance policies sold by SimplyBusiness.co.uk in 2006 (versus 2010) shows a marked increase in landlords aged 18-34. Likewise the gender gap is beginning to close as 39% of landlords insured via SimplyBusiness.co.uk are female, versus 36% in 2006. Interestingly, when comparing the types of property being insured, there hasn’t been a statistically significant change since 2006 with terraced housing still accounting for the largest

CHRISTMAS 2019 - RENTAL HOMES

CHRISTMAS 2019   The festive season is not far off and we just wanted to take this opportunity to confirm our opening hours over the Christmas holiday period and also to outline a few procedures: We will close for the holiday period at   Midday on 23rd December . Opening on   27th and 28th December between 9am and 1pm . We will open normally from   2nd January 2020 at 09.00 . Day to day issues which could wait until normal office hours resume on the   2nd January 2020 , should be reported then.   Our contractors may be on call but many of their suppliers close down over the Christmas period so parts can be hard to locate. We will not attend any “lockouts” over the Christmas break but can pass on the details of a good local locksmith if this occurs – the cost of which will, of course, be yours. A small request   – if you have   any   problems with your heating and hot water now or maybe an appliance that is a bit temperamental and you have been meaning to report the

What about afterwards?

It seems hard to believe that this COVID19 situation has been with us for just over 4 weeks. It actually feels like at least 2 months. If you can bear to watch the daily briefings from the government without reaching for a razor blade then you will be hearing that, just maybe, we are reaching the apex of the death rate curve and, just maybe,  there will be a relaxation of movement and a return to economic activity by most of us, subject to social distancing, masks etc. From a property market point of view, I've been decrying the gloom merchants who have been talking about 16% price falls. This is for reasons that beyond economics, people go their own way and predicting human sentiment to situations is not an exact science. I came across this article by a well-respected commentator called Roger Martin-Fagg who seems to see things my way - or I see things his way!  You have the time available so I recommend that if you want a spoonful of positivity then read this post: https: