12 Top Tax Tips to Easter – #8 Planning for a wealthy retirement
The run-up to Easter is the perfect time to consider tax planning opportunities and to put in place strategies to minimise tax before the new tax year starts on 6th April 2016. That’s why we have launched a series of 12 top tax tips to help you mitigate your tax bill.
Good planning and careful timing are critical if you want to maximise tax reliefs or minimise the tax bill on a transaction or investment, and to avoid falling foul of the system of penalties and interest levied by HM Revenue & Customs (HMRC).
Our 8th tax tip focuses on pension contributions and retirement planning.
#8 Planning for a wealthy retirement
- A pension contribution paid before 6 April may reduce both your tax bill for 2015/16 and your payments on account for next year. You receive tax relief for the contributions at your highest marginal tax rate.
- The annual contribution limit for an individual (personal and employer contributions) is £40,000, for each pension input periods (‘PIP’s) ending before 5 April 2016. This year is a one off, you could get benefit from an extra allowance of £40,000, allowing pension contributions of up to £80,000. The rules are complicated so please ask HMT for guidance.
- From 6 April 2016, the contribution limit will be reduced by £1 for every £2 of ‘income’ if you earn over £150,000 in a tax year, until your allowance drops to £10,000.
- If you have made pension contributions below the limit in 2012/13, 2013/14 and 2014/15 then unused relief may be available for carry forward into 2015/16.
Tax is a complex matter, so we recommend that professional advice is sought when considering any of the above. Our highly qualified and experienced tax team would be happy to discuss your tax affairs with you.
If you have any questions regarding your tax affairs, learn more from Goodwin Barrett, and please do not hesitate to contact our tax team on 01491 579740.