With just a few days to the end of the financial year on 5th April, we wanted to remind you of the top 5 things we think you should do to keep in great financial health.
Top up your ISA
The end of the tax year is when your tax free ISA (Individual Savings Account) allowance runs out. Currently the allowance is £20,000. So you still have time to transfer more into your ISA if you haven’t reached that amount. Don’t forget that everything you put in to your ISA is, and stays, tax-free for as long as it is there.
The ISA allowance is not changing in the new financial year. The Junior Individual Savings Account allowance and Child Trust Fund annual subscription limits also remain at £9,000.
Top up your pension
You also have an Annual Allowance for your pension, which is the total amount that you, your employer and any third party can pay in across all your pension plans in a tax year. The standard Annual Allowance is currently £40,000. This is changing in the new financial year, as the Chancellor has increased it to £60,000 from April 2023.
This, and several of the other pension changes in the Budget, will have the impact of allowing people to pay more into their plan. People with higher salaries or bigger pension pots, who can really afford to make the most of these new allowances, are more likely to benefit from the changes.
Just like with an ISA, this limit resets on the 6th April and you have access to your entire allowance again for the new financial year.
There are very many tax benefits from putting money into your pension. If you are the director of a private limited company paying into a pension can help reduce what you pay to HMRC. If you get a work bonus, you might have the option to put some or all of it into your pension plan which could save on tax and National Insurance deductions. We regularly advise clients about how to make the most of their pension as part of their overall tax planning strategy.
Check your state pension
All the information about your state pension is here https://www.gov.uk/check-state-pension – you can check when you are able to claim it and how much it is going to be. In the new financial year, the basic State Pension will increase from £141.85 per week to £156.20 per week. It’s a 10 per cent increase but we would guess it’s probably not enough to give you the comfortable retirement that you are planning – and that you deserve.
Check any personal or occupational pension pots that you have
Your pension provider will send you an annual statement. It will include the value of your pension pot at the start and end of the statement year, contributions paid to your pot and an estimate of the income you could get at your selected retirement date.
If you have several pensions from previous jobs, it will be worthwhile to access all that information and get an overall picture of your pension assets.
Book an appointment to talk to us
Every client we speak to has a unique set of circumstances which mean that we can only give very broad pointers in a blog post. We specialize in advising company directors and high earners on the best way to save into their pensions and eventually to draw money out of their pension. If you are planning on retiring in the next couple of years, now is the perfect time to ensure you are doing everything you can to increase your pension pot and ensure you can take your money out in the right way to support your retirement.
There’s still time to talk to us before the end of the financial year, so book an appointment and we’d be delighted to help you.
Because financial health is financial wealth