Now is the time to discuss your tax planning issues with your financial adviser
The run up to the end of the tax year in April, which this year falls mid week and before the Easter break, is always the busiest time of the year for us at Beaufort Asset Management and we want to make sure that all our clients' tax affairs are in order and that you have made the most of legitimate tax free savings, investments and allowances. Billions of pounds are wasted each year by UK taxpayers who just don't plan efficiently and we're here to help you.
The most popular tax free savings vehicle is the ISA. This year the ISA allowance is £15,240 for adults and up to £4,080 for Junior ISAs, for those under 16.Your Beaufort adviser will guide you through the options available to make the most of this. The number of ISA millionaires continues to grow and there is no reason why one should pay into an ISA into retirement. The 6th of April, the first day of the new tax year sees the launch of the Lifetime ISA or LISA. If you're over 18 and under 40 and need to save for a deposit on your first home this is one for you. Save up to £4,000 a year and the Government throws in an extra £1,000, up to a maximum of £32,000 and until you turn 50. The LISA is a also a useful tax free retirement savings vehicle.
Your Beaufort Asset Management adviser will guide you through all the other ways of mitigating inheritance, corporation and capital gains tax bills and making the most of personal, pension and other allowances, as well investing tax efficiently in a number of EIS and VCT schemes that are currently on offer.
The 8th of March sees Chancellor Hammond's first and last spring Budget - it is moving to the autumn. We will let you know the meaning of any changes in legislation announced at our annual tax planning seminar on the morning of the 14th of March at the Hilton Hotel, Drake Way, Reading. If you would like to attend, please complete the form on Seminars page on this website.
Pension Transfers: do I switch or stick?
You may have read recently about transferring your occupational pension, in the weekend papers, perhaps. I wonder what happened to the pension plan I was enrolled into some years ago when I worked for so and so, you may ask yourself? A bit of homework later and you've discovered a pension pot you'd completely forgotten about. How do I make this cash work for me? And it isn't just the over-55s who are allowed to drawdown a tax free lumps sum that we are talking about here.
If I had a final salary pension, I'd cash it in now the headline accompanying a recent Financial Times column cried out. Pension funds are seemingly very keen for members to transfer out and are offering sensational valuations, sometimes 40 times the predicted annual income the fund will provide in retirement. Then we recall the plight of the BHS pensioners and other large pensions that have massive black holes in them.
Pension funds value their future liabilities - what they believe they will have to pay out to pensioners in the future, is based on bond yields which have recently hit record lows. This sounds technical but what it means is that the lower the yield of the bonds in which the pension scheme is invested, the more the transfer value rises. The argument goes, therefore, that now is the time to transfer your old British Airways or Barclays Bank pension, at an inflated value and put it into a more hard working pension scheme such as a SIPP or SSAS. But is it as simple as that? You are of course giving up the guaranteed regular income in retirement that your pension scheme predicts it will pay you, every month for the rest of your life and then onto your surviving spouse or partner.
Should I transfer out or leave the pension where it is? This is one of the most frequently asked questions and opinions vary. Every case is different and you really must seek the advice of your financial adviser.