Herald - Issue 411

Page 56 • The HERALD • 26th August 2021 v THE HERALD - Proud to be part of your community v YATES & CO Chartered Accountants Specialists in providing accounting and taxation advice to small businesses and individuals Contact: Colin Yates A.C.A. Telephone: (023) 8086 1550 E-mail: enquiries@yatesco.co.uk Personal and Friendly Service Waterside Bookkeeping Services include: • Bookkeeping • VAT Returns • CIS • Payroll • Accounts Preparation for Sole Traders Please contact us at: info@waterside-bookkeeping.co.uk 07503 158114 Licensed, regulated and insured ASK A PROFESSIONAL ISA or Pension? What’s Best for You? by Michael Osman, Oyster Financial Planning Investors looking for tax-e cient ways to build a nest egg for retirement o en look to both Individual Savings Accounts (ISAs) and Pensions. Tax-e ciency is a key consideration when investing because it can make a considerable di erence to your wealth and quality of life. In truth, there’s a place for both, and it’s easy to argue the case for each of them. ISAs allow you to invest up to £20,000 each year (currently), providing tax-e cient growth and income. Withdrawals are tax-free. Pensions are also tax e cient. All allowable contributions receive tax relief from the Government at your highest rate of tax. For example, it would only cost a basic-rate taxpayer £80 to contribute £100 into their pension because they would receive tax relief at 20%. For higher earners, it is even better, with higher-rate taxpayers only needing to e ectively contribute £60 in order to boost their pension fund by £100. If total contributions from all sources, including your employer if applicable, exceed the annual allowance there will be a tax charge unless if the excess can’t be covered by going back 3 years using up previous unused allowances. So, pensions give you tax relief on money going in, but when it comes to drawing on your pension, tax will be payable at your marginal rate apart from the tax-free lump sum. ISA investments don’t bene t from initial tax- relief, but they do give you total tax exemption on any gains made within the ISA. So, with an ISA, when you come to withdraw funds, you will not pay a penny of income or Capital Gains Tax. To properly understand which option (or both) are better for you seek professional advice. Pop in and see Michael at Oyster Financial Planning opposite Lloyds Bank in Hythe if you have any questions. Michael Osman