Unless you really enjoy giving your hard-earned money to the tax man, I think it’s safe to say we would all like to pay as little tax as possible – especially if you are subject to Higher or Additional rates of taxation.
For the 18/19 Tax Year, if you earn above £46,350.00 the excess is taxed at 40% – ouch! However, there are some ways in which you can manage the amount of income tax you pay, sounds interesting – right?
One of the most effective ways of managing your income tax liability is to utilise what’s called your ‘Annual Allowance’. Your Annual Allowance relates to the amount you can contribute to your Personal Pension and receive Tax Relief.
Tax Relief? This is an amount that is added to your pension contribution by the government. The amount received is based on your marginal rate of tax – so if you’re a higher rate tax payer you will effectively receive 40% relief on your contribution. In simple terms a £100 pension contribution will cost:
A basic rate tax payer £80 – tax relief of £20 will be given
A higher rate tax payer £60 – tax relief of £20 will be given and an additional £20 claimed
An additional rate tax payer £55 – tax relief of £20 will be given and an additional £25 claimed
If you would like to talk to one of our experienced Financial Planners about utilising your Annual Allowance before the end of the 18/19 tax year, then please contact the office on 01778 342291 to arrange a FREE initial consultation.
But be quick – though technically you only have until the start of April to take advantage of this tax year’s Annual Allowance, you will definitely need to come and see us sooner!!!