Are you making the most of pension tax incentives?

Enable's Independent Financial advisors in Bishops Stortford know that about 400,000 people earlier this year were dragged into the 40% income tax band. If you were one of those people and you in the pre-retirement area and looking to take stock of your financial position maybe we can help.

Changes that came into force in April meant that people now pay the 40 per cent tax rate on income over £41,450, compared to £42,473 in 2012/13. But there is a silver lining , you should also be able to access the more generous 40 per cent top-up the Government provides on pension contributions, which could boost your pension pot by as much as £60,000. The way the tax relief works is by the Government providing a top up to your pension contributions, the level of which depends on what tax band you are in. So if you are a 20 per cent, basic rate taxpayer, the Government will give you 20p in the pound for money you put into your pension, if you make a £100 pension contribution it will actually only cost you £80

For someone paying 40 per cent you only pay £60 of a £100 contribution for an additional rate taxpayer, they would only pay £55 for the same contribution. Someone who just sneaks into the 40 per cent band - on £41,500 for example - could end up paying the rate on a marginal amount of income, but see a marked boost in their pension saving.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.