Maximising Your Pension
The generous tax reliefs allocated within pension arrangements means that they play an important role in tax planning. Personal contributions to a pension currently qualify for Income Tax relief at the individual’s highest marginal rate and can also indirectly provide other tax advantages. For example, using the Tapered Annual Allowance, carrying forward unused reliefs and optimising Lifetime Allowance protection opportunities.
“People who earn between £100,000 and £122,000 should look for ways to escape the 60% tax rate by getting their taxable income down to £100,000. Making a pension contribution is an excellent way of doing this since it is deductible in calculating income,” says Ian Price, Divisional Director at St. James’s Place.
The value of a pension with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs depends on individual circumstances.
“Pension contributions can also help bring your income level below the additional rate tax band, which starts at £150,000 of taxable income, or the high income Child Benefit tax charge, which affects those with incomes over £50,000”, says Price.
Brief guide to achieve your retirement goals
You can pay in a regular amount or make a one off lump sum payment
Other people can also make a contribution on your behalf – i.e. employers, partners or other family members can help you save for your retirement
You can pay into a pension for someone else, for example your children (age restrictions apply)
It is flexible – you can change the amount you pay in and pay lump sums if you want
If you die before you retire, the value of your plan could be paid as a cash lump sum to your beneficiaries
The amount of tax relief you’ll receive depends on your individual circumstances
If you would like more information, please contact Wellesley Wealth Advisory on 01444 244 551 or via email at info@wellesleywa.co.uk
Related Services
Inheritance Tax
Without careful planning, HM Revenues & Customs could become the biggest beneficiary of your estate.
Nearing Retirement
When approaching retirement age, the right type of advice can make a huge difference. Start to prepare your finances for retirement, at least two years before you retire.
Planning Retirement
When you retire, depending on your type of pension, you have the option of taking up to 25% as tax-free cash from your pension savings.
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