Pensions Tax Relief/ Act sooner rather than later!

20 October 2017

Every year, we normally have the annual scaremongering stories about what is going to be cut in the Budget. I am not sure this has ever changed in my 30 plus years of financial services and this year does not look any different.

The Government is not exactly awash with cash, indeed, quite the opposite and we have seen the HMRC collection teams being far more active than they have been in past years with some organisations and individuals. But, as always, there are usually good financial planning changes that can be made to gain tax relief on your overall tax burden and one simple way, if available, is to make pension contributions. And it is this pension topic that is the subject of this year's speculation, as it was last year.

Will our Chancellor, Philip Hammond MP, stop tax relief, make it a flat rate, end higher rate tax relief? I am not sure he has finalised the position and to me this raises the question, why wait to find out? If you have funds available and can make a contribution now, then it may well be worthwhile. If nothing changes, you should get your tax relief; if everything gets worse after 22 November 2017 - well, you achieved the contribution in time.

It's also a great time to review pension contributions anyway and to look at other opportunities, such as HMRC Carry-Forward for the last three years to see if you can effectively use up additional tax relief. Also, for higher earners (above £150,000 gross) pension tax relief is tapered. If your earnings are over approximately £210,000 gross in this tax year (2017/2018 including company pension contributions) the maximum contribution of £40,000 gross from all sources in a tax year could fall to £10,000 gross. Therefore, if your employer pays in regularly, you need to see if this contribution still fits within limits or needs to be changed. And half way through the tax year, in October, is a good time to review your pensions, investments and overall financial planning.

Because we are all individuals, with individual and unique requirements and limits when it comes to pensions, no individual advice is provided during the course of this blog. Talk to the team at Chapters Financial to see how we can help.

Keith Churchouse FPFS

Director

CFP Chartered FCSI

Chartered Financial Planner

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