INCOME TAX (PENSIONS) ACT 2008

Contributions Annual contributions of up to £300,000 are allowed in each tax year, for tax purposes. Transfers from existing schemes do not count towards this total, and this upper limit will be reviewed annually. The tax relief claimed cannot exceed 100% of annual earnings. There is a minimum allowance of £3,600. Taking Benefits For Isle of Man residents, benefits can be taken from age 50. For non-Isle of Man residents, the minimum age is 55. There is no compulsion to buy an annuity, but it remains an option. Income Withdrawal (as Drawdown will be called) must begin by age 75. Tax free lump sum is 30% You can take your tax free cash but there is no need to commence income withdrawal. In addition you can receive your pension without retiring from your place of employment. Death Benefits Death before taking benefits results in a full refund of the fund, free of tax. Death after taking benefits (including tax free cash), the fund provides income withdrawal for the surviving spouse/partner. On second death, there is choice. The remaining assets can be passed to other Isle of Man Approved Pensions without any tax being paid. Alternatively, the surplus can be passed to the estate but there is then tax payable of 7.5%. Investments There are four tests for an investment and if all four are met, the Assessor will approve the investment, on a discretionary basis, in some instances. The application of the tests could potentially mean that investments in residential property may be allowed. Each assessment will be assessed on its merits. IOM Newsletter No. 8 IOM Newsletter No. 3: All Change