Lane Clark and Peacock and Shilling Communication launch pensions tax calculator

Lane Clark and Peacock (LCP) and Shilling Communication have launched a pensions tax calculator.

The calculator, which can cover any occupational pension scheme, has been created to help pension scheme members understand the potential impact of the pensions tax changes effective from April 2011.

The pensions tax calculator can be accessed by logging on to a hosted website.

Mark Jackson, partner at LCP, said: “The calculator has been designed to meet a specific, yet critical need for members of UK pension schemes. 

“The new annual allowance of £50,000 for tax privileged pension savings can create surprise tax bills for pension scheme members. There are so many moving parts in this tax calculation that employers have a mountain to climb to help their employees understand how they are affected by the tax changes.

“This tool does the hard work for them. It allows an individual to look at how their pension savings and subsequent tax charges evolve over the next five years. The calculator gives an early warning of any tax charge, and an understanding of factors that will affect their annual allowance tax charge. 

“Ironically, bearing in mind these tax changes are intended to reduce the cost of tax relief to the Treasury, we believe that many people are using the calculator to estimate how they can fully utilise their allowances and actually increase tax efficient pension savings.”

Alex Thurley-Ratcliff, head of multimedia at Shilling Communication, added: “It is a simple yet very effective tool. By entering a few straightforward details about themselves, members can immediately see an indication of the potential growth in the value of their pension benefits, for tax purposes, relative to both the annual allowance and the lifetime allowance.

“Graphs show members which savings are, and are not, subject to tax, as well as any unused allowances. Customised messages accompany the graphs, stating clearly whether members have exceeded the allowances or when they might do so in the future.

“Members can update assumptions, such as salary increases and the consumer prices index, by moving easy-to-use sliders between predefined values and the graphs update live on the page.”

Read more articles on pensions tax changes