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By Louise Crush of Westgate Wealth Management
It’s a common misperception that tax year-end is something for accountants alone, but 5 April is much more than just a date. It’s an opportunity.
Almost all of us have tax-free allowances, many of which are annual. After 5 April each year, your annual personal allowance, ISA allowance, pension contribution allowance and gifting allowances all reset to zero. So, tax-savvy savers max out their ISAs, top up their pension and/or make gifts to loved ones before tax year-end. Alongside reducing tax liabilities and using valuable allowances, these savers are building good savings habits that will help secure and enhance their financial future. Are you?
Starting a pension doesn’t mean you’re about to stop work. But starting one early means that when you do, you should have considerable savings. So, you’re never too young. In fact, the longer you save, the more you have the potential to benefit from compound interest, and the longer you get the benefit of tax relief.
If you keep all, or most of, your money in a savings account, you need the interest rate to be higher than the rate of inflation. Otherwise, your money will be losing value in real terms. Plus, if your savings are earning you more than £1,000pa for basic rate taxpayers or £500 for higher rate, then you will pay tax on anything over these thresholds. It’s a good idea to keep some cash in an easy access savings account as emergency funds, and for your upcoming tax and VAT, but there are many other tax-efficient places for your money for the long-term.
If you’re doing your job well, you shouldn’t have time to do ours too. Financial planning isn’t the same as budgeting. Many people are good at managing their personal or family budgets, but long-term financial planning requires an additional level of professional expertise and knowledge, to prepare for major life stages, navigate complex decisions or challenging market conditions. Tax regulations, for example, can change regularly. It’s easy to miss opportunities, or accidentally find you’ve made a costly mistake, and you can’t rely on your accountants to put you on notice to opportunities either.
With the potential at the Bar for earnings to increase significantly as you establish your practice, it is increasingly likely that you will become fully tapered on your pension annual allowance, reducing it from £60,000 to as low as £10,000pa.
Working with an adviser: Each year we review your earnings, your savings capacity and the pension annual allowance available to you. We ensure you maximise savings into your pension while they are available to you, so when you reach retirement your pot is as substantial as possible. You utilise allowances as far as possible, before you become fully tapered. You don’t miss out on allowances or significant tax relief, and benefit from long-term compounding and investment growth.
Working without an adviser: You are building up significant cash savings but haven’t started a pension. For several years you had a full pension annual allowance, but when you decide to start saving, the maximum available to you is £10,000pa. You aren’t familiar with carry forward rules for previous years’ unused allowances, and could have missed out on larger annual allowances that were available to you in previous years. Your savings will build up, but without alternative savings plans that do not benefit from the same tax relief, your retirement savings will be limited, and the tax relief you will receive from pension savings, significantly less.
Paying unnecessary tax diminishes your wealth. But there’s still time to review your financial plans and make the most of tax year-end, and the opportunities it provides. To book your 30-minute initial consultation before 5 APRIL or for a copy of our FREE Tax Year-End Guide, scan the QR code, or contact us on tel: 01962 353153; email: enquiries-westgate@sjpp.co.uk; web: www.westgatewealth.co.uk/specialistadvice/the-bar
Louise Crush is a Chartered Financial Adviser at Westgate Wealth Management, Senior Partner Practice of St. James’s Place. Called to the Bar in 2015, Louise has built a specialist practice advising members of the Bar nationally and provides financial education services for chambers.
Westgate Wealth Management Limited is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The St. James’s Place Partnership and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
It’s a common misperception that tax year-end is something for accountants alone, but 5 April is much more than just a date. It’s an opportunity.
Almost all of us have tax-free allowances, many of which are annual. After 5 April each year, your annual personal allowance, ISA allowance, pension contribution allowance and gifting allowances all reset to zero. So, tax-savvy savers max out their ISAs, top up their pension and/or make gifts to loved ones before tax year-end. Alongside reducing tax liabilities and using valuable allowances, these savers are building good savings habits that will help secure and enhance their financial future. Are you?
Starting a pension doesn’t mean you’re about to stop work. But starting one early means that when you do, you should have considerable savings. So, you’re never too young. In fact, the longer you save, the more you have the potential to benefit from compound interest, and the longer you get the benefit of tax relief.
If you keep all, or most of, your money in a savings account, you need the interest rate to be higher than the rate of inflation. Otherwise, your money will be losing value in real terms. Plus, if your savings are earning you more than £1,000pa for basic rate taxpayers or £500 for higher rate, then you will pay tax on anything over these thresholds. It’s a good idea to keep some cash in an easy access savings account as emergency funds, and for your upcoming tax and VAT, but there are many other tax-efficient places for your money for the long-term.
If you’re doing your job well, you shouldn’t have time to do ours too. Financial planning isn’t the same as budgeting. Many people are good at managing their personal or family budgets, but long-term financial planning requires an additional level of professional expertise and knowledge, to prepare for major life stages, navigate complex decisions or challenging market conditions. Tax regulations, for example, can change regularly. It’s easy to miss opportunities, or accidentally find you’ve made a costly mistake, and you can’t rely on your accountants to put you on notice to opportunities either.
With the potential at the Bar for earnings to increase significantly as you establish your practice, it is increasingly likely that you will become fully tapered on your pension annual allowance, reducing it from £60,000 to as low as £10,000pa.
Working with an adviser: Each year we review your earnings, your savings capacity and the pension annual allowance available to you. We ensure you maximise savings into your pension while they are available to you, so when you reach retirement your pot is as substantial as possible. You utilise allowances as far as possible, before you become fully tapered. You don’t miss out on allowances or significant tax relief, and benefit from long-term compounding and investment growth.
Working without an adviser: You are building up significant cash savings but haven’t started a pension. For several years you had a full pension annual allowance, but when you decide to start saving, the maximum available to you is £10,000pa. You aren’t familiar with carry forward rules for previous years’ unused allowances, and could have missed out on larger annual allowances that were available to you in previous years. Your savings will build up, but without alternative savings plans that do not benefit from the same tax relief, your retirement savings will be limited, and the tax relief you will receive from pension savings, significantly less.
Paying unnecessary tax diminishes your wealth. But there’s still time to review your financial plans and make the most of tax year-end, and the opportunities it provides. To book your 30-minute initial consultation before 5 APRIL or for a copy of our FREE Tax Year-End Guide, scan the QR code, or contact us on tel: 01962 353153; email: enquiries-westgate@sjpp.co.uk; web: www.westgatewealth.co.uk/specialistadvice/the-bar
By Louise Crush of Westgate Wealth Management
Update from the Chair of the Bar
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Lauren Fullerton examines the how, what and why of setting up a second chambers base
