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4. Planning to use your pension fund for a buy-to-let?

Under the pension freedoms, some investors have or are considering taking their pension fund to invest in a buy to let property.

Their argument is that the rental yield is at least as good as the return from an annuity and they retain the capital investment.

But following on from the restriction of income tax relief introduced in the Summer Budget, Mr Osborne announced that from 1 April 2016 those buying additional residential properties such as buy to let or second homes will see an increase in stamp duty by 3%.

(Tax relief for finance costs on residential properties will be restricted to the basic rate of income tax from 6 April 2017.)

The increase in the cost of purchasing a buy to let property, combined with the restriction of income tax relief, may make you decide to either leave the money in their pension or look at other types of investments that can provide greater tax benefits.

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