Probably unintentionally, George Osborne has gifted older savers a smallrisk-free £500 pension loophole. It's buried in the Budget pensions rules where Osborne details plans to take small pension pots as cash. The nub of it concerns tax relief added to pension pots. But there's a catch as always.
How much could you make from it realistically?
£500 up?In theory, £500 but in reality it's more likely to be £300-400, independent financial adviser Jeremy Edwards from Bankfield financial advisers in Leicester told AOL Money. "You've got to have £8,000 lying around now and you've got to be over 55. Plus there will be advice and transaction costs to absorb."
"Anyone who's paid in a significant sum to their pension," Edwards also warns, "may be worried about their annual allowance and their lifetime allowance."
Be quickThe loophole is this: the new rules let you pay into a pension pot with added tax relief, withdrawing the money as a single cash sum. But a quarter of this can be taken tax free. Paying in £8,000 to a pension pot pushes it to £10,000.
Pensions expert Tom McPhail tells Telegraph readers he doesn't expect people to use the ruse for long. "It is a loophole and I expect the Chancellor to close it without delay."
Ex-pat warningMeanwhile the Chancellor has predicted that around 30% of savers are likely to take their pension cash out of pensions altogether in the new Budget changes. Ex-pats though should take heed.
Osborne is thought to be tinkering with scrapping the personal income tax allowance for expats. That means an expat couple drawing pension income in the UK, including the state pension, could pay £2,000, according to iExpats.com.
"The government intends to consult on whether and how the allowance could be restricted to UK residents and those living overseas who have strong economic connections in the UK," iExpats.com quotes Osborne.