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19 May 2023, 13:43 GMT+10
Chase Buchanan Wealth Management Launches Specialist Expat LTA Advisory Service With Pensions Expert Malcolm McDowell
Chase Buchanan Wealth Management, a global financial advisory firm with offices across Europe and North America, has announced a new service specifically designed to assist with wealth management and adapting pension savings strategies in light of UK Lifetime Allowance (LTA) reforms.
While the removal of the upper Pound 1.073 million cap on UK pension savings has largely been received as a positive, it introduces significant changes to risk profiles, potential inheritance tax exposure, and the decision-making process expatriates make when deciding how best to handle their pension wealth.
In the 2023 Spring budget, the Chancellor announced a series of reforms impacting pension savings, and higher earners, effectively allowing higher contributions or for savers to resume contributions into funds valued close to the previous Pound 1.073 million LTA.
Pension withdrawal strategies will be affected not only by the removal of the cap but by the restriction placed on 25% lump sum withdrawals, the maximum tax-free drawdown pension savers are entitled to make.
While the LTA has been abolished, the lump sum drawdown cap remains based on 25% of the previous LTA. However, if the fund includes LTA protection, the 25% tax-free value is based on the protection granted.
Within the wealth management sector, there are several key aspects of these reforms:
On the latter, the Labour Party has publicly stated that it intends to reinstate the LTA, if elected, levying a tax obligation of 55% on lump sum withdrawals over the 25% limit, or 25% based on pension wealth above the LTA, plus income tax.
Technical changes may also be likely since the formal abolishment of the LTA is expected to occur next year, which may further mean there is a limited window in which savers and those approaching retirement can take advantage of the new rules or restructure their pension wealth to gain long-term tax efficiencies.
Malcolm McDowell, a Private Wealth Manager, is heading the new advisory service and has a long-standing reputation as a specialist in pensions advice for expats, including in Ireland, the US, Canada and across Europe backed by 20 years of professional wealth management experience.
He says: "Like so many sudden, unexpected reforms, removing the LTA cap has significant repercussions for those saving towards retirement and with pension wealth of Pound 800,000 or above.
Leaving pension assets in situ without assessing available opportunities could be a serious error. Even though the total LTA threshold has been removed, the limit on tax-free lump sum withdrawals remains subject to the previous cap, restricting access to pension wealth.
Another consideration is where the higher annual allowance, now at Pound 60,000, reduces for higher-income individuals, further adding complexity where clients need a clear, objective view of the options, whether transferring pension funds overseas, retaining a UK-based scheme, or reinvesting in an alternative with greater flexibility and control.
I am delighted to be heading the new advisory service, supporting our clients with navigating their pension plans in the context of changing UK tax legislation and ensuring we shine a light on the varied opportunities with confident, fuss-free financial advice.'
Pension planning has always been a complex financial matter. Individuals need to account for varied taxation charges, deductions, restrictions and rules which dictate how they access their pension wealth, how much of their wealth is exposed to taxation, and the treatment of residual savings passed to beneficiaries.
Chase Buchanan indicates that the major effect for many is that their risk profile has altered dramatically and immediately.
The removal of the LTA is expected to be introduced through formal legislation in a Finance Bill next year. In the meantime, the LTA tax levy will not apply when calculating tax obligations on excess pension wealth, but there is scope for further changes.
Pension savers should also note that, as yet, the inheritance tax treatment of pension funds has not changed. Where funds remain unused, and the fund holder passes away, the full fund value should pass to nominated beneficiaries.
However, tax obligations depend on the circumstances, as beneficiaries inheriting pension wealth from individuals who pass away before 75 do not incur an inheritance tax liability. In contrast, when funds are withdrawn, estates owned by older scheme holders will incur a tax charge based on the individual's marginal income tax rate.
Therefore, retirement planning does not solely relate to the value of the fund, the location of pension wealth, LTA and lump sum drawdown tax liabilities or income tax obligations. It also involves a broader analysis of future inheritance tax obligations imposed on estate beneficiaries and heirs.
Malcolm also comments that strategic, independent guidance may be important for pension holders who, from 6th April 2023, can continue accruing benefits within pension funds protected from the LTA, which previously may have imposed restrictions on making new contributions.
Conditional LTA protections will have changed, which means that fund holders may wish to transfer their savings, accrue additional pension benefits, or make other arrangements to enhance their retirement wealth without sacrificing their right to a higher LTA protection limit, remaining in place with regard to the 25% tax-free lump sum.
He says, "Having been part of the Chase Buchanan team for the past eight years and drawing on my career providing financial advisory services in Eastern Europe, Switzerland, the UAE, Germany, Luxembourg and now the UK, I understand how challenging financial, retirement and estate planning can be for foreign nationals. Our aim is to demystify, simplify and equip every client with the knowledge they need to make informed financial decisions."
Further information and a planned downloadable guide to further explore these considerations are available through Chase Buchanan Wealth Management.
Read more about Chase Buchanan: Chase Buchanan Private Wealth Management Partners To Provide Expert Advice to Expats
About Chase Buchanan Private Wealth Management
Chase Buchanan is a highly regulated wealth management company who specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, Malta, Portugal, Spain, UK and the USA.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.
Media Contact:
Malcolm McDowellChase Buchanan Ltd+44 (0) 1252852045
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Source Company - https://chasebuchanan.com/
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