It’s Tuesday!
Let’s talk Tax.
Read this week’s short Tax snippet for doctors & dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – in fact, you can read it whilst you drink your afternoon coffee!
Pension tax relief
It isn’t common knowledge that the Government gives tax relief on annual pension contributions of up to £3,600, even if your income is zero, and you are not actually paying any tax.
Contribute for a non-earning wife and get £720 tax relief
Therefore, it is possible for you to pay into a registered pension scheme for a non-earning spouse and still claim tax relief at the basic rate, enhancing your joint household pension pot.
Contribute for your children too
It goes further still, as there are no restrictions on age, so contributions can even be made for your children. Tax relief can be claimed as if they were paying tax at basic rate.
Because the duration their pension account will be open, means their pension fund will be considerably larger when they reach retirement, than if they opened it just at the typical age of 30.
Family financial planning
Pension planning is an effective way of tax planning for you and your family. Here is an example of how you can build the pension funds for your family members, in a tax efficient way.
Example: Contribute £2,880 for a spouse and receive £720 in tax saving for your contribution. This leaves a gross amount of £3,600 in the pension pot.
Contribute for 3 children as well and receive £720 for each pension fund, totalling £2,160 in tax relief.
Work with a specialist accountant and tax adviser to ensure you are maximising the opportunities available to you.