If the Cap Fits….
Posted August 28th, 2012
Just a reminder, if you weren’t aware already, If you were one that would reach the ceiling of £50,000 a year contributions in your
personal pension, you may have found, or been advised to look at MIPs. A MIP is a Maximum Investment Plan. They were often used by those that hit the afore mentioned cap of £50,000 as a way of investing further without hitting any tax free cap.
You could invest as much as you liked in a MIP and you would never pay tax on any returns assuming the policy
remains qualifying. However, a change included in the budget means that there is now a limit of £3,600 that can be invested in one of these schemes as tax free. Anything beyond that and you will have to pay tax on the returns.
The changes are explained in much more depth here:
http://www2.skandia.co.uk/Adviser/KnowledgeDirect/Tax–Trusts/Income-Tax/Qualifying-Policy-Rules/
So you could take a policy out for £10,000 pa but there would only be tax relief on the first £3,600.
You may find you are unaffected by the changes. However, if you have a MIP and would like to know more, or even consider other ways to invest beyond your pension the why not get in touch?
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