Part of any planning is to take the relevant steps at the right time. We don’t intend to give you lots of words on each and every thing you need to look out for, although we do list them below.
The main thing is that if you don’t plan, it could cost you a lot of money. A survey done recently by a firm – Dunstan Thomas – found that those who had professional help with retirement planning were £13k better off than those who went alone. So on that basis, let us put some other planning issues to you.
- ISAs: If you regularly save through ISAs, you are unlikely to have any Capital Gains Tax issues. After the first £11,300 of gains are counted, it is then taxed at 18% if you are liable at 20% income tax, and 28% if you are liable at 40% income tax.
- Pensions: When affordable, always pay into a pension, but don’t exceed the annual allowance of £40k or the lifetime allowance of £1m. Under the new pension freedom rules though, when you reach the age of 55, you can take out up to 25% of your total pension fund tax-free. This could be worth a lot of money and is not to be ignored; you could use it to repay a mortgage or at least put a big dent in one, for example.
- In Retirement: If you planned your retirement using both pensions and ISAs, you could have the best of both worlds. Admittedly you don’t get tax relief when paying into an ISA, but you don’t get taxed when withdrawing from it either. In retirement, you could take out £11,500 a year from your pension fund, and you could take £13,500 from your ISA. This would leave you with £25,000 income per year with no tax to pay. Now that’s planning!
- Married Couple’s Allowance: If you plan things between spouses, you can utilise everyone’s tax-free allowance and so could withdraw £11,500 x2 = £23,000, meaning you would only need to take out £2,000 per year from ISAs to have the same income as in the above scenario.
- Marriage: The marriage allowance is worth £200 a year; as a well-known actor said, “Not a lot of people know that”.
The bottom line is that you need to plan things out – failing to plan is planning to fail after all. Planning can save you money or make you money; failure to plan on the other hand can cost you money. So do even a small bit of planning as every little bit helps.
If you would like some advice on planning, then why not contact Money Advice & Planning. Visit us at www.mapfinances.co.uk and use the contact form. Alternatively, call your local MAP adviser at a time which suits you.
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