Contents
Don't leave it to chance
Family tax planning
Tax payback - tax credits
Pay rise for the other half?
Jam today, or jam tomorrow?
Pension payments and tax relief
Employee pensions
Children's pensions?
Borrowings and tax
Investment limits
Employee cars and fuel
Give generously and save tax
Capital gains
Capital losses
Second homes
Company or trade?
Inheritance tax
Children's savings?
Business tax
Two jobs = too much NIC?
Should VAT be flat?
Mutiny and bounty
One careful owner
A matter of trust
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Pension policies have had a bad press recently, with the Equitable Life debacle and the slump in Stock Market values - but the tax relief for pension contributions is still attractive, and many people regard this as a good way of providing for their retirement. If the market has reached the bottom, it is the best time to invest - if only it was possible to be sure! Many people therefore try to pay the maximum possible contributions, which are based on a percentage of your earnings. If you have not paid the maximum contribution in one year, you can top it up by paying more up to 31 January in the following year and "carrying back" the contribution. The rules on this procedure are complicated, and it is worth making sure that all the paperwork for a contribution will be valid before you make it. As usual, hurrying in order to beat a tax deadline may lead to a poor investment decision, so it is better to plan this well before 31 January. People who have the old style "retirement annuity plans" (a policy that started before 1 August 1988) can still pay premiums up to 5 April and carry them back to the previous year - the rules have not changed. They also still pay 100% of the premium to the insurance company and claim back all the tax from the Revenue, while people with more recent policies pay 78% to the company and enjoy tax relief partly by having the Revenue contribute 22% to the fund. So the difference between the types of policy is particularly confusing, and if you have any of the older-style plans, it is particularly worthwhile to check what you can pay and when. It has now been confirmed that the whole system for tax relief on pension schemes will change radically on 6 April 2006. The biggest effect will be felt by: - those with very large pension funds; - people who have very low earnings but are able to pay contributions because they had higher earnings in the last five years. These people will need to take advice as soon as possible. But everyone with a pension fund will be affected, because the new rules will apply to existing schemes as well as new ones. So it will be worth reviewing your pension provision in more detail than normal as 2006 approaches.
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© Bayar Hughes & Co., 2010.