As usual, it’s busy in the world of financial services. We are approaching the end of the tax year and it’s the last chance to make pension contribution recommendations for a number of our clients. The 60% tax rate for those whose annual income falls between £100,000 and £116,210 can be recovered by a pension contribution making this a valuable tax saving .
The same can be said for anyone who will be losing their child benefit; a pension contribution could reduce your taxable salary and leave you still entitled to child benefit.
If you are suffering 50% income tax I am sure you are aware that this will fall to 45% from April. This does mean, however, that you can get 50% tax relief on any pension contribution you make before the tax year end. Even if you withdrew your contribution immediately afterwards you would be entitled to 25% tax free cash, then the balance at a rate of 45% income tax.
That’s pretty effective tax planning. As always though, individual advice is very important, so give me a call with any individual queries.