Page 56 • The HERALD • 20th February 2025 v THE HERALD - Proud to be part of your communityv ASK A PROFESSIONAL REASONS TO BOOST PENSION POTS BEFORE APRIL 2025 by Michael Osman, Oyster Financial Planning e tax year end is coming and even with the impending introduction of Inheritance Tax on death bene ts, pensions remain the best place to save for retirement and wealth transfer. With tax relief available at a client’s highest marginal rate, it remains as important as ever to maximise contributions. erefore, we have compiled a checklist of discussion points that may prompt you to take advantage before the tax year end. Annual allowance e annual allowance for the current year has been maintained at £60,000, an increase of £20,000 from 2022/23. e extra scope to pay more into pensions could reduce the higher tax bills faced by some clients whose earnings have crossed the higher rate or additional rate thresholds. A pension contribution will extend both the basic rate and higher rate bands by the gross amount paid. Carry forward of annual allowance Maximising this year’s annual allowance, plus unused allowance carried forward from the last three years, allows a maximum contribution of £200,000 for those that have had a break from pension funding. Clients must have enough ‘relevant UK earnings’ in the current year to get full tax relief on individual contribution. No LTA charges e lifetime allowance (LTA) charge was ‘o cially’ scrapped this year, so those who had previously put Bonus sacrifice e tax year end o en coincides with a business’ year end and, for some employees this could mean a bonus payment. ‘Exchanging’ a bonus for an employer pension contribution before the tax year end can bring several bene ts. e employer and employee NI savings made could be used to boost pension funding, giving more in the pension pot for every £1 lost from take-home pay. Summary Pensions remain the most tax e cient way to save for retirement for most people. e availability of taxfree cash, coupled with tax e cient returns from the available tax relief during working life, outweighs the income tax paid in retirement. E ective tax planning is a year-round job. But it’s only at the end of the tax year that you have all the information needed to use the allowances and reliefs in a tax e cient way. is can be a boost to savings but remember that, in most cases, allowances not used before the end of the tax year will be lost altogether. If you would like to discuss your pension and retirement planning in more detail especially with the tax year end at mind please consider Oyster Financial Planning to help you. Based in Hythe Village and here to serve our community get in touch by calling: 023 8084 8410 or email: michael@oyster nancialplanning.co.uk or just pop into the o ce. the brakes on funding to stay within LTA may wish to recommence pension savings. Even if a client’s existing bene ts exceed the ‘lump sum allowance’, meaning they are not entitled to any further tax-free cash, pensions can still be a great place to save. Although most pensions will form part of the estate from April 2027, savers will still enjoy investment returns free of income tax and Capital Gains Tax (CGT). Given the recent CGT allowance squeeze and the October 2024 increases in CGT rates, obtaining unfettered growth is likely to be key for investors. Michael Osman, Oyster Financial Planning
RkJQdWJsaXNoZXIy MTIyNzI=