As experienced Independent Financial Advisors at Enable we have long advised that pension contributions provide a useful and efficient way of reducing income tax liability, with individuals benefiting from income tax relief at their highest marginal rate for pension contributions made.
In this tax year contributions can be made up to 100% of earnings, subject to an annual allowance of £50,000 each tax year (and within lifetime limits) and since April 2011, there has also been a three year carry forward rule that allows individuals to carry forward unused annual allowances from the last three tax years. The initial workings of the Finance Bill 2011 have recently been amended and the revised guidance was published at the end of last year on 25 November 2011, allowing any payments over £50,000 in the last three years to be ignored in the carry forward calculation.
For tax planning for those with earnings over £114,950 currently (£116,210 in 2012/13) a pension contribution in the tax year will allow them to recover some of the personal allowance otherwise lost and provide significant tax relief. Whatever your age or your income in the current economic climate, with increasing income tax bills and with the state pension age set to increase from 2018, our Independent Financial Advisors at Enable can help you work out your personal pension contributions and help you build up additional pension funds for retirement. Pension are offering more value than ever to many individuals who are making the most of their income tax situation.
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