Your UK pension is likely subject to a 55% flat tax


Virtually all UK residents will have a pension scheme of one sort or another. There are a few facts about your UK pension scheme that are worth noting namely:

1. All income that is withdrawn from the scheme is taxable in the UK

2. You are restricted in the type of investments allowed in the scheme

3. You are restricted to the currency of your investments

4. You cannot withdraw from the scheme until age 55 (or sometimes older depending on the rules of the specific scheme) but you must begin withdrawing by age 75.

5. Any residual capital that you want to pass on to your spouse or children is subject to a scheme death charge – which is a 55% flat tax.

6. If you made Aliyah and you are within your 10 year Israeli tax holiday, the UK government may refuse to allow gross basis withdrawals from your UK pension scheme and will deduct tax at source (at the highest marginal rates – up to 50%) for all such withdrawals.

It should also be noted that if you die before age 75 and you have not taken any withdrawals from your pension scheme, you will not be subject to the 55% scheme death charge. However, life expectancy for the average male or female is 80/81 years of age and most of us will need to use our pension funds during retirement. Which means, for most of us, the 55% scheme death charge is a reality.

For those making aliyah (even if you made Aliyah many years ago, we can still help you achieve many of the benefits outlined below), you can arrange your UK Pension so that you can accomplish the following:

1. All income that is withdrawn from the scheme is NOT taxable in the UK
2. You are LESS restricted in the type of investments allowed in the scheme
3. You are LESS restricted to the currency of your investments
4. You cannot withdraw from the scheme until age 55 but you must begin withdrawing by age 75.
5. Any residual capital that you want to pass on to your spouse or children is subject NOT to a scheme death charge – which is a 55% flat tax
6. Numerous pension schemes can be combined into one scheme for ease of administration and lower costs
7. You are not required to purchase an annuity when you begin withdrawals
8. If you qualify for the 10 year Israeli tax holiday, within that period you will be permitted to:
 Make a 25%-30% lump sum withdrawal tax free AND
 Take payments out– tax free.

For more information please contact us at 054-309-1867 or hcc31@hallmarkcc.com

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