Ten New Faces at RMT Accountants as Practice Expansion Drive Accelerates
June 1, 2018
Pensions are one of the most tax-efficient ways to invest, and tax relief continues to be a considerable advantage to the millions building a fund for retirement. At the moment, the government automatically tops up your pension contributions with tax relief at 20% (so for a £100 contribution you only need to put in £80). But relief rises to 40% if you are a higher rate tax payer, with the additional tax relief claimed via your annual tax return.
Unfortunately, it’s unclear how long these generous tax breaks will last. Tax relief on pension contributions costs the Treasury £34 billion a year* and the government has now confirmed it is looking at ways to reform the system.
With this in mind, the best course of action might be to take advantage of the current rates of tax relief available, and increase pension funding levels to make the most of your ‘annual allowance’.
The annual allowance is the maximum you can invest into a pension and get tax relief from the government. It is currently equivalent to the total of your earnings up to a maximum of £40,000 a year. Any allowance you have not used can be carried forward but only for the previous three years. Potentially you could add £180,000 to your pension fund immediately and benefit from up to £72,000 tax relief at current rates.
Investing now, while the current rates of relief are still available, could make all the difference to your financial future.
We would welcome the opportunity to spend some time explaining the tax relief available and how you can get maximum advantage for this year and the years to come. It could also be a good opportunity to discuss the newly introduced freedoms for taking income, even if your retirement is some years away.
To discuss this, and any other retirement planning needs, please contact your usual RMT representative on 0191 256 9500 and we can introduce you to one of our pensions experts.
June 1, 2018