Your pension is one of the most tax efficient investments you may hold. Not only do you receive full tax relief on your contributions (with some exceptions – see below), but those contributions are invested in funds which can grow free from tax. This could make a significant difference to the value of your savings over the long term and increase your income in retirement.
We provide our own SIPP* (Self-Invested Personal Pension) which can help you benefit from tax efficiency, diversification and flexibility for your pension savings.
The current pension rules are broadly:
- You can contribute to as many pension schemes as you like.
- You can contribute a total of up to 100% of your UK taxable earnings, subject to an Annual Allowance of £40,000** each year.
- If you haven’t used up your £40,000 Annual Allowance in any of the three previous tax years, any unused allowance can be carried forward to the current tax year.
- You will receive full tax relief on your qualifying contributions. This means that if basic rate tax is 20%, for every £80 you invest HMRC will add £20. If you are a higher rate or an additional rate tax payer, you can claim the additional tax relief through your annual self-assessment tax return.
- The funds grow free from tax.
- You can draw your retirement benefits at any time from age 55 – you don’t even have to retire to draw your benefits.
- You can draw up to 25% of your fund as a tax free lump sum and the balance can be used to provide an income.
For further details, please contact us.
