Planning your pension

As a dentist you are likely to be impacted by the forthcoming changes to the way in which pensions are taxed by the Government.

What are the changes and why are they important? From April 6, this year the amount you can save into your pension with tax relief each year will reduce from £255k to just £50k. This is known as your annual allowance and includes the increase in your NHS Pension Scheme benefits and contributions to any other pensions.

There will also be an increase in the way that pension benefits are valued in defined benefit pension schemes, such as the NHS Pension Scheme, which means an increased likelihood of exceeding the annual allowance and incurring tax charges. Any pension savings above your annual allowance will be taxed at your highest marginal rate of tax.

In addition, from April 6, 2012, the standard lifetime allowance, the total amount of pension savings you can build up tax efficiently over your lifetime, will reduce from £1.8m to £1.5m.