Bhargaw Buddhdev, is warning high-earners that if they do not apply for fixed protection 2014 (FP14) before the 6th April this year they could miss out on as much as £250,000 of pension savings tax relief.
High-earners need to be aware of the FP14 opportunity for pensions tax-relief before the door closes forever on 5 April this year.
From 6 April 2014, the lifetime allowance (LTA) will be reduced from £1.5million to £1.25million. However, to protect those with pension assets (or projected assets) in excess of £1.25million, FP14 is available which allows the retention of the current LTA of 1.5million, provided the member makes no further contributions after 5 April 2014 (should an application be successful, individuals are still able to make further pension contributions up until April 5 2014). If an individual does not apply for FP14 by 5 April this year they will have missed the boat and be stuck with the new lower LTA of £1.25million, potentially wasting up to £250,000 of tax relief needlessly.
Anyone (other than those with Primary Protection) can apply for FP14, although it is most beneficial to those individuals who think that the value of their pension savings may continue to grow beyond £1.25million without making any new savings after 5 April 2014. High earners should seek advice now to avoid being frozen out after 5 April.
It’s also worth noting that the 5 and 6 April fall on a weekend this year so applications should be submitted before Friday the 4 April. Helpfully, HMRC have simplified the application process considerably and it is now possible to submit applications online rather than by post.