Expertise for your retirement
3 ways to save and invest tax efficiently
1. Maximise ISAs up to £20,000 a year
- You can invest up to the annual allowance, currently £20,000, each tax year.
- You can transfer between ISAs for better deals without losing benefits.
2. Access your pension tax efficiently
- In addition to the 25% tax-free lump sum, you also have an annual tax-free personal allowance. This could be subject to a lump sum allowance or other protections.
- After that, the taxable portion of your pension is subject to income tax.
- Carefully plan when to take withdrawals. Bear in mind the tax year calendar (April -to – April), and the amount to minimise taxes. Large withdrawals could push you into a higher tax bracket.
3. Tax relief on pension contributions
Pensions are one of the most tax-efficient ways to save for the future, and there can be many options depending on your circumstances. Here are some good facts to know:
Basic-Rate Taxpayers (20%): Contributing £80 results in a £100 pension boost, as the government adds £20.
Higher-Rate Taxpayers (40%): You need to contribute just £60 to achieve the same £100 boost.
Additional-Rate Taxpayers (45%): You need to contribute only £55 to achieve the same £100 boost
Annual limit: Ordinarily £60,000 or 100% of your earnings, whichever is lower.
Even if you don’t work or pay tax, you can still receive tax relief on your contributions.
A professional adviser can help you to understand the options available that best fit your needs. Fees may apply if you take out a product or service.
The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors might not get back their initial investment.
Tax treatment depends on the individual circumstances and may be subject to change in the future.
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