Ipswich Financial Adviser

Posts Tagged ‘income’

If you have climbed the corporate ladder or been successful at running your own business and are earning in excess of £130,000 per year then you need to be fully aware of the restricting tax relief, on pension contributions, that will affect you. 

You need to make sure you have calculated your “Net Relevant Income” correctly to see if you have actually earned above the £130,000.  This includes your income that is chargeable to income tax and pension contributions paid under a net pay arrangement. The calculation does allow you to deduct certain losses and reliefs, relievable pension contributions subject to a maximum deduction of £20,000 and donations that qualify for gift aid. Finally, if a salary sacrifice has been agreed previously, then this may have to be added back into the income figures depending on certain rules.

The calculation is not straight forward and you have to do this for the 2007/2008, 2008/2009 and 2009/2010 tax years. If in any one of those years your income was at or above £130,000 then the new pension tax relief restrictions could have an affect on you.

I would strongly advise that if your income is near or above the relevant figure that you get appropriate financial advice to ensure you make your financial planning as efficient as possible.

Please contact Thompson Financial Consulting and we will be happy to give you the right advice and help you through the pension changes.

An easy way to preserve your money is to ensure you get your self assessment tax return done on time.

If you miss the deadline of the end of January 2010 to submit your return to the HRMC then you will incur a penalty.

Don’t let the HRMC have more of your money, so bite the bullet and get your tax return done before the cut off date.

The second thing to do is to check that your tax code is correct. Don’t assume that this has been correctly applied by an employer. If it is wrong you could be missing out on  tax free income. Check with your employer or HRMC to ensure you get what you are entitled to.

If you have any tax issues then please contact Thompson Financial Consulting and we can put you in touch with accountants that come highly recommended.

If you feel you could potentially have an issue about paying Inheritance Tax then it is always best to seek professional help, as there are many ways to eradicate or reduce this liability.

One way is to gift money out of income to your beneficiaries while you are alive. This type of gift, subject to certain rules,  does not attract inheritance tax, so you reduce the level of your estate.

There are certain rules that the HRMC attach to this,  one of the most important, is that the regular gift out of income should not impact your normal standard of living. In others words the gift does not affect the way your run your live.

There are other issues to consider, but if you do receive more income than required and you are at a stage in your life that you don’t need all that income, then planning around the disposal of some of this income can help towards inheritance tax planning.

If you require any help or advice on inheritance tax planning then please feel free to contact Thompson Financial Consulting and we will be happy to help.

At present, if you reach your 50th birthday then you can potentially take up to 25% of your personal pension fund as a tax free lump sum. Unfortunately, from the 6th April 2010, the age to be able to do this changes to 55. There is NO transitional period, the change just comes in.

If you have always considered taking your tax free cash and you are not 55 on the 6th April 2010 then you will have to wait until you are. This could potentailly mean a wait of up to 5 years; as if you reach your 50th birthday just before the 6th April 2010 and don’t action a request for a tax free cash withdrawal then you will have to wait 5 years until your reach 55. This could affect your retirement plans.

If you feel this issue will affect you then you need to start planning now. Contact Thompson Financial Consulting Ltd and we will be happy to help.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

Most people have a “herd mentality” to their investing. Are you part of the “herd?” It is usual for people to choose the “flavour of the month” when it comes to choosing their investments. They will pour money in to ONE popular asset class  within a popular fund. They fill their pension or investment portfolio with  narrow focused funds, only to find that overtime, their performance is poor.

Investing is more about looking forward than backwards. Past performance can help but must not be relied upon. There are many stories of investor chasing a particular asset class and fund because of its past performance, just at the time, when the investment sentiment has ran its course and the past returns are unlikely to continue. Remember the dot com bubble or the  commercial property bubble to name just a couple?

Don’t get caught by the “herd mentality”, you need to ensure you have a broad spread of investmnets and not just chase the current “flavour of the month” in investment circles.

Please contact us if you require help and advice on investing within portfolios or pensions. It will save you becoming one of the herd! Contact Thompson Financial Consulting for help and advice.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

There has been a lot in the press about the increase in the state pension age since the political parties had their conferences.

However, the government has already increased the state pension age for many millions of people. Do you know when you’ll receive the state pension? This benefit is very important as it makes up a large proportion of the income that many people receive in their retirement.

Check out the link below to the Direct Gov website, where it will let you know your current state pension retirement age. http://pensions.direct.gov.uk/en/state-pension-age-calculator/home.asp

Remember that it is always vital to start your retirement planning early and NOT leave it to your later years.

Please feel free to contact me at Thompson Financial Consulting Ltd if you require any help or advice with your pension planning.

I have been helping one of my clients that has reached her retirement age and she wants to take an income from her pension. By getting the best retirement product for her, her income has increased by a hugh 12%per year

When you approach your retirement age and want an income from your personal pensions, you buy an “Annuity” with the pension money and the “Annuity” pays you a regular  income. ALWAYS, shop around for the best annuity rates and DON’T just accept what your current pension provider offers. If you do, you are likely to be throwing money away!

If you are of an age that you are considering taking a pension income, let Thompson  Financial Consulting help you get the  income that you deserve.