The first big milestone of the New Year is tax return time at the end of January. This is always a fraught time for any accountant as they wait on clients delivering the necessary receipts on time.
From a Wealth Management point of view we usually see a focus on tax, and more accurately the amount of tax.
From now until April 5th we see a shift towards looking at tax planning and tax efficient investments as the amounts due and the amounts paid are freshest in our minds.
We have covered tax efficient investments recently at Tax Efficient Investment Ideas.
As I mentioned last week pensions will be the big topic this year with the changes we have coming in April.
It might be worthwhile going over some of the basic benefits of investment in pensions:
20% tax relief at source with your remaining margin rate claimed on your tax return (up to 45%).
£40,000 annual contribution allowance with carry forward available up to 3 previous years for unused allowance.
Tax free growth within the pension.
25% tax free lump sum.
No requirement to annuitise.
Unlimited access from age 55 subject to income tax.
Tax free lump sum on death before age 75.
Ability to leave your pension to multiple beneficiaries outwith your estate for IHT purposes.
Already this year we have had this conversation with almost every client we have spoken to and we don’t see that changing.
As you know at Murphy Wealth we prefer to focus on goals and objectives rather than products but we cannot stress the importance of this issue enough.
So when you are looking at writing that cheque to HMRC don’t forget about pensions.
We wont mentioned pensions again for a while (we promise) but we are obviously delighted to speak to anyone who has any questions about this, particularly if you are nearing retirement.