High networth individuals to benefit from carry-forward rules

Rich People to Benefit From New Carry Forward Rules

Rich People to Benefit From New Carry Forward Rules

High networth individuals may maximise their contributions this tax year by putting commercial property into Self Invested Personal Pension (SIPP) schemes together with the new carry-forward rules; said the head of pensions at Alliance Trust Savings, Steve Latto.

After the annual allowance for pension was reduced to £50,000 from April 6, the amount became restrictive for many wealthy individuals, said Mr. Latto. However, the new carry-forward rules allow individuals to make gross pension contribution of £200,000 at a net cost of £100,000.

“Sipps purchasing a commercial property from a member could become increasingly popular in the coming months. With the Sipp purchasing the commercial property, the owner of the business can receive a significant capital injection that they can use to make further contributions”, he said.

“The new carry-forward rules mean an individual could contribute up to £200,000 gross next tax year dependent on their contribution history. Purchasing a commercial property can be complex and professional advice should always be sought”, he added.

Most wealthy individual business owners had their own commercial properties and their SIPP could purchase commercial properties to release cash sums outside their pensions.

Depending upon their contribution history, they could reinvest their money into their SIPP and claim tax benefits up to £100,000.

“I welcome the introduction of the new carry-forward rules to the pension system. It allows greater flexibility in the way individuals can contribute into a pension policy”, said Tuhin Ahmed, pension adviser at Courtiers.

“Some of the temporary legislation introduced by government in recent years put off many high net-worth individuals contributing into pension plans and I believe the introduction of carry-forward and its associated tax benefits will encourage more involvement”, he added.

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