Are you up to speed on pensions?
HMRC research into public understanding of pensions tax relief found considerable lack of awareness as to how tax and pensions fit together. Broadly, an individual is entitled to make pension contributions and receive tax relief on the higher of £3,600 or 100% of earnings in any given tax year – though tax relief is generally restricted for contributions above the annual allowance (£40,000). Higher earners may be impacted by the annual allowance taper, which can in some circumstances reduce the annual allowance to £4,000.
The maths underlying tax relief means that for every 60p saved by a higher rate taxpayer, the government adds 40p, a 66.6% contribution. For every 80p contributed by a basic rate taxpayer, the government adds 20p, a 25% contribution.
If we work on your tax return, rest assured, we get involved in this detail and look, where ever possible, to take advantage of pension tax reliefs. Hopefully, you have a financial adviser who we can work closely with, to ensure you are getting the right pension advice, leaving us to submit the most beneficial tax relief claims year on year.
If you haven’t spoken to us about the tax benefits of making pension contributions before, please do give us a call. The tax savings of using a pension are, as demonstrated above, potentially very favourable.
If you are new to Revel and are keen to find out more, please call a member of the Team on 01428 555100 or contact us by email here.