Self-employed professionals receive a welcome boost under new state pension rules

Are you self-employed and approaching retirement age? Well, for a change Steven Glicher accountants can bring you a little good news. You may have just got a little windfall that you may not necessarily have known about. Under the new state pension rules your pension has just increased.

Prior to the changes any sole trader who reached pension age qualified for a maximum entitlement of £119.30 under the previous basic state pension. After the changes this month self-employed professionals are now entitled to a new maximum of £155.65. Therefore you should be entitled to an extra £145.40 a month from now on, so that has to be good news.

The biggest concern for accountants and pension advisors however, is that despite the changes seven in ten self-employed professionals are still not aware of their new entitlement. Speaking about this discrepancy, Steven Cameron, Aegon UK’s pension director said:

“For those self-employed individuals who reach state pension age from [6th April], it’s a case of ‘what a difference a day makes’. Someone who reached their state pension age – currently 65 for men and 63 for women – on or before 5 April will continue to receive a state pension under the previous regime.”

“The self-employed were [previously] excluded from the additional earnings related pension so their maximum possible state pension was £119.30. But those reaching state pension age on or after 6 April will receive the new state pension which can be up to £155.65 a week – an extra £36.35 a week. With many people spending more than 20 years in retirement, some self-employed could gain almost £40,000 more from being eligible for the new state pension.”

However, Mr Cameron also added a note of caution, warning that, as welcome as the news might be, the new basic state pension entitlement may not be enough to secure a truly comfortable retirement:

“While this may come as a very pleasant surprise to the growing number of self-employed who reach state pension age in future; even at the higher level it is unlikely to provide a comfortable lifestyle in retirement.”

“Unlike employees, this group are not benefiting from automatic enrolment into a workplace pension, making it even more important [than ever] to make adequate private pension provision for themselves.”

If you’re already working as a sole trader, Steven Glicher accountants can help you keep control of your financial affairs. From self-assessment tax returns and tax savings to business planning and cash flow projection, our accountancy services and tax advice can help self-employed individuals focus firmly on doing what they do best.

For further information about the new state pension changes, or for advice on how we can help your business, contact Steven Glicher accountants on 0161 485 8007 or email info@stevenglicher.co.uk

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