Save tax and plan for your future all in one with pension savings
The end of the tax year is fast approaching, and it always brings opportunities to do some tax planning. One area that should be part of this exercise is to ensure that you have made the fullest possible use of your annual tax allowances for pension contributions.
Here’s six easy steps to make the most of your pension savings.
1. Pension contributions
Paying money into your pension before 5th April can help to shave money off your annual tax liability, especially for higher rate taxpayers but also for limited companies with 31 March year-end date. For individuals, the maximum contribution in 2021/22 is £40,000 .
2. Unused allowances from earlier years
Unused allowances from the previous three years can be carried forward, which means high-earners can make large contributions to reduce their tax exposure.
3. Timing of payment
In order to get tax relief on your contribution, you should ensure payment is made by 31 March if you’re planning on a lump sum contribution to maximise your pension allowance.
4. Setting up a pension for the first time
If you are self-employed or a company director and you haven’t yet set up your own personal pension plan, it would be wise to start thinking about this sooner rather than later, especially if you want to make a contribution in the current tax year. There will be time needed to consult, advise on and carry out the setup of a pension scheme suited to your needs. Act now if you need to get something in place to make a contribution in the 2021/22 tax year!
5. Take Advice
Pensions are a highly regulated area and require specific financial advice before acting, to ensure you are maximising your investment potential and tax reliefs available. We can work with you to recommend and act alongside a pension consultant suited to your needs.
6. Act Now
If you’d like to find out more about setting up a pension scheme suited to your circumstances, contact us ASAP and we can help to start the process now.