Over the next few weeks tax chat will cover our seven deadly sins of tax planning, or in other words seven key things to make sure that you avoid prior to the 5 April 2019. Starting with…. Forgetting pension contributions.
Since the introduction of greater flexibility, investing in a pension is one of the most tax efficient ways to save for your future. Pension contributions currently receive up to 45% income tax relief, 20% added automatically, the balance claimed via your tax return.
There have been rumours that higher rate tax relief will be withdrawn or capped, but currently there is no restriction.
Broadly, those under 75 can contribute as much as they earn per tax year, up to a maximum of £40,000 for most people. Anyone earning over £100,000 should check their maximum contribution with their advisor.
If your spouse is not earning you can also fund a pension for them. Non-earners can contribute up to £2,880 per tax year, and the Government will add £720 in tax relief, bringing the total to £3,600 even though the individual pays no tax.
You can aslo fund a pension for your child, in the same way, though this may not be as attractive due to the restricted access until age 55.
For more information, please contact Lesley Sutton on 01484 550037 or email email@example.com. or your financial advisor.