Due to greater simplicity, choice and flexibility, pensions are a more attractive option for retirement savers than ever before. What’s more, the tax incentives are hard to beat. In the video below, Andrew Shaw, Head of Investment Communications, discusses the main benefits of a pension.
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.
What is a Pension
Subject to limits on how much you can contribute, for every 80p you pay into a pension plan, the government adds 20p, boosting it to a total contribution of £1. However, higher and additional rate taxpayers can claim extra tax relief through their annual tax return, meaning that a £1 pension contribution can effectively cost them just 60p and 55p respectively.
These tax breaks are so advantageous that they will inevitably remain under government scrutiny; and for this reason, change cannot be ruled out in the future. You should therefore try to take advantage of the existing reliefs by making full use of your annual allowance.
The annual allowance is a limit on the tax-free pension savings you can make in a tax year. By maximising this year’s allowance and carrying forward any unclaimed allowances from the three previous tax years, you can benefit from current rates of tax relief and potentially enjoy a higher income when you stop work. Those who don’t take advantage of this opportunity by 5 April could lose out on significant tax relief benefits.
Please get in touch to review your retirement plans and ensure you don’t miss out on the valuable tax reliefs and allowances available.