Contents
New Year's resolutions
Investment limits
Borrowings and tax
Family tax planning
Mr and Mrs
Give generously and save tax
Jam today, or jam tomorrow?
Tax payback - tax credits
Bringing it back home
Children's pensions?
A matter of trust
Children's savings?
All change for gains
Second homes
Portfolio gains
Capital ideas
Tax-free perks
Employee pensions and NIC
Pension policies
Employee cars and fuel
Business tax
Pay rise for the other half?
Company or trade
Two jobs = too much NIC
Should VAT be flat?
VAT and cash
Inheritance tax
One careful owner
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The tax reliefs for pension contributions are there to help you provide for retirement. Most people are reluctant to put enough away, so the taxman offers a big incentive - if you are a higher rate taxpayer, then putting £600 in will buy you £1,000 of investments which are held in a tax-free fund. You get tax relief on most pension contributions net of basic rate tax relief, and the government pays the other 22% into your policy. A higher rate taxpayer gets the other 18% through the self-assessment return. The money is saved up to give you a tax-free lump sum of up to 25% of the fund on or before your 75th birthday and a taxable income after that. Annuity rates have not been attractive in recent years, but if you are going to live a long time there are few better ways to save up the money to live on. Since the rules changed in 2006, you can now get tax relief on up to 100% of your current earnings, instead of a percentage which varied with age. So you can make the whole of your tax liability for the year disappear. Of course, you need something to live on, but if you have a cash windfall - say a legacy - bumping up your pension fund might be something to think about. Because most pension premiums are paid net of basic rate tax, the cut in the basic rate from 22% to 20% on 6 April 2008 will affect your contributions. To put the same amount in overall, you will have to increase what you pay directly to the pension company. Pension providers are likely to contact all their policyholders about this over the next few months.
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