Take your pension to the max

Pensions have long been seen as a tax-efficient form of investment. The contributions that you pay into your pension will benefit from tax relief and aren’t subject to tax while they’re invested in your pension pot (although the tax credit paid with dividends can’t be reclaimed by your pension scheme). Contributions to your employer’s pension scheme (including any additional voluntary contributions you make) can be made from your gross pay before any tax is charged.

From 6 April 2015, there will be no restrictions on how much income you can withdraw from your defined contribution pension pot, but any income that is withdrawn (and it is possible to withdraw your whole remaining pension pot in one go) may be subject to income tax.

Tax-deductible expenses

If you’re self-employed, you can claim expenses against your tax bill, but not all business expenses qualify so it’s important to make sure your claim is valid. Unless something you buy for your business is a capital asset, for example, a computer or machinery (which you claim for under different rules), you can deduct its full cost when working out your taxable profits. You receive immediate tax relief for the full amount.

Tax-free extra income

By signing up to the ‘rent a room’ scheme, not only could you enjoy the extra income from the rent, but also up to £4,250 a year is free from tax. ‘Rent a room’ relief is an optional scheme that lets you receive up to this amount in rent each year from a lodger, tax-free. This only applies if you rent out furnished accommodation in your own home.

The main points that could affect you on tax, savings and spending from the Chancellor’s red box

The Autumn Statement 2014 has once again created winners and losers. These are some of the main points that could affect you on tax, savings and spending.

Buyers benefit from a tax-free bracket and incremental steps up

The change to residential property Stamp Duty Land Tax (SDLT) announced in the Autumn Statement 2014 will make the process fairer for the majority of homebuyers. The new rules started on 4 December last year, and these changes apply to you if you are buying a home in the UK for over £125,000.

There are two main types of schemes

Defined contribution schemes

A defined contribution (DC) or money-purchase pension scheme is one that invests the money you pay into it, together with any employer’s contribution, and gives you an accumulated sum on retirement with which you can secure a pension income, either by buying an annuity or using income drawdown.

Occupational pension schemes are increasingly a DC, rather than defined benefit (DB), where the pension you receive is linked to salary and the number of years worked. As an alternative to a company pension scheme, some employers offer their workforce access to a Group Personal Pension (GPP) or stakeholder pension scheme.

Limiting the amount of tax relief you’re allowed

You can save as much as you like into a pension, but there is a limit on the amount of tax relief you’re allowed. The Lifetime Allowance for pensions is currently £1.25m (2014/15). In essence, the Lifetime Allowance is intended to cap the level of tax-advantaged pension funds that an individual can accumulate within their lifetime. You usually pay tax on any private pension savings above the lifetime allowance.

You’ll get a statement from your pension provider telling you how much tax you owe if you go above your lifetime allowance. Your pension provider will deduct the tax before you start getting your pension. You still need to report the tax deducted by filling in a Self Assessment tax return – you’ll need form SA101 if you’re using paper forms.

Looking forward to a secure and financially independent retirement

It’s good to have choices when it comes to pensions and your retirement, but it’s also important to understand all your options from age 55 onwards.

With the money in your pension pot, you could buy an annuity, take some while leaving some invested, take it all at once, leave it all where it is, or a combination of these. Whatever you do, 25% will be tax-free with the rest subject to tax.

The single most important decision you can make to help realise your long-term goals

Retirement planning involves making your plans for the future now – that means investing your money with the aim of maximising its value ready for when you retire. Careful retirement planning, the right mix of assets and starting sooner rather than later will help lead to the retirement you are looking for.

Historically, for many people, the traditional view of saving for retirement was to simply put your money into a pension, with few decisions to make in the run-up to your retirement date and no choice over how the pension was taken.

Over half of the UK population unaware of government plans

Over half of the UK population are unaware of government plans to reform the State Pension and the impact that will have on them, according to recent research[1]. Among the 55 to 64-year-old age group, 32% are unaware of the changes due to come into effect in April 2016.

New rules will simplify the existing regime

The Chancellor, George Osborne, has brought forward the expected announcement on the tax charge that applies to certain individuals’ pensions on their death. The new rules will simplify the existing regime and come into force from 6 April 2015, abolishing the 55% tax that applies to untouched defined contribution pension pots of people aged 75 or over, and to pensions from which money has already been withdrawn.

Three very important questions you need to consider, sooner rather than later

Inheritance Tax (IHT) in the UK may be one of life’s unpleasant facts, but with the appropriate IHT planning and professional advice, we could help you pay less tax on your estate. The aim of this guide is to provide a brief outline of IHT, a subject that was once something that only affected very wealthy people.

Over half of the UK population are unaware of government plans

Over half of the UK population are unaware of government plans to reform the State Pension and the impact that will have on them, according to recent research[1]. Among the 55 to 64-year-old age group, 32% are unaware of the changes.

The most radical reforms this century

In Budget 2014, Chancellor George Osborne promised greater pension freedom from April next year. People will be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax-free.

Six years after the start of the financial crisis, what lessons should we have learnt?

1 Plan for the unexpected

Many believe that markets are much safer today than they were six years ago, thanks in large part to the numerous regulations and safeguards put in place to avoid a repeat of the financial crisis.