With an extra day this year and working an extra day for 'free', it made me wonder about how we can all help make things as tax efficient as possible and so save some of it! There are a range of solutions that can be used, but this is an ideal opportunity to capitalise on these arrangements. Who knows what will happen in the upcoming budget (rumours of changes to pension tax relief for example) so make hay while the sun shines!
With the annual allowance having been reduced to £50,000, high earning individuals are now restricted on how much they can contribute to a pension and not suffer a tax charge. For these individuals it will become important to build up tax efficient savings and investments outside of their pension.
The attached link to Financial Planning Bulletin there is a look at different forms of savings and investments that may offer tax efficient savings during retirement.
ISAs
The annual ISA allowance will rise this tax year from £10,680 to £11,280, meaning this will be a beneficial savings option for higher earners.
In addition to this Moneysavingexpert Martin Lewis' weekly email had a reference to ISA's and this mention boosted a building societies cash ISAs traffic by 16,000%. Why not capitalise on this!
Collectives and investment bonds
After first considering ISAs, the common choice of investment for retail investors is insurance based products and collective investments. There is also a look at investment bonds and collectives and compare the tax benefits for each.
Telegraph Article on ISA's and Pensions - 29th Feb 2012
Money Marketing - ISA's more popular than Pensions - 29th Feb 2012
JD
