The government have introduced a new tax break, from April 2017, allowing anyone to withdraw up to £1,500 from their pension to pay for pension and retirement advice. The maximum amount permitted is £500 in any single year, which can be done three times in total, amounting to the total of £1,500. This allowance isn’t just for those approaching retirement – it can be used at any age.
Studies have shown that those who employ a financial planner tend to save significantly more and accumulate larger pension pots than those who do not. This new tax break is to try and help a greater number of people afford and take financial advice, specifically aimed at pensions and retirement planning.
Taxing the full tax-free sum of £1,500 (in three instalments) will save a higher rate income tax payer a total of £600 and a basic rate income tax payer would save £300.