Q. I have read a lot about Gordon Brown’s tax raid on pensions, and recent articles discussed that the Treasury fought for two years to prevent the publication of advice to the Chancellor given in 1997 before he went ahead.
As a dentist, I started investing £1000 gross per month that very year when I started doing a lot of private practice. What I would like to know is how has his tax raid damaged my private pension, and what is it really costing me?
A. Prior to 1997, your pension fund was entitled to a tax credit on any tax paid on the income it generated from dividends. The budget of 1997 removed that tax credit.
You say that you have invested £1,000 gross per month since 1997, and also told us that you are now aged 42, and plan to retire at age 58.
So, what has been the long-term impact of this tax change on your pension? Using a new calculator (link below), it shows:
- The value of your fund at age 58 – £913,286
- This figure if GB had not removed the tax credits – £1,021,012
- % difference – 10.6%
- Monthly net extra inestment required to make up the difference – £195
FIND OUT THE COST TO YOU AND TAKE ACTION IF REQUIRED!
Calculator available at-
http://www.brewindolphin.co.uk/PensionTaxCalculator/
