In the current climate where any form of investment, including cash, struggle to provide worthwhile returns, it is more important than ever that you maximise the use of your tax allowances. Some of the most generous of these are within the Pension sector.
At the lower end of the scale, it is possible to contribute £3,600 to a fund for a non-tax payer and still get tax relief at 20%. This is due to the fact that the contributions are made net of basic rate tax, but are not clawed back for a non-tax payer such as a non-working spouse or children/grandchildren. Therefore a net contribution by them of £2,880 immediately becomes £3,600 providing an uplift of 25% with no growth needed.
At the other end of the scale, providing that earnings are available, contributions can be made up to £235,000 for the current year and £255,000 in the year ended 5 April 2010. However it is possible to combine two payments leading to a contribution of £480,000 for the year end 5 April 2009, and applying 40% relief this would lead to a saving in tax of £192,000. For more advice or if you have a question regarding your contributions, contact Graeme Young, Chartered Financial Planner gyoung@thorntons-law.co.uktel 01382 229111
Protecting your Pension
5 April 2009 not only represents the end of a tax year, but also the deadline for anyone with high Pension fund values to register for protection. Should you have Pension benefits at retirement which are more than the lifetime allowance, which is currently £1.65million, they will be subject to a tax charge of 55% on the excess. For high earners with lengthy service, particularly in the public sector, merely registering for protection could save substantial amounts of tax.For a no obligation chat to discuss your position, contact Graeme Young, Chartered Financial Planner
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