At Furnley House, we believe financial planning should be straightforward and tailored to your unique needs. Tax efficiency plays a key role in helping you keep more of your hard-earned money while achieving your goals. By making smart use of pensions, investments, and expert advice, you can stay on top of your finances and secure a brighter future.
Making the most of Pensions
Pensions are one of the most tax-efficient ways to save for the future. Contributing to a pension not only prepares you for retirement but also reduces your taxable income. Basic-rate taxpayers receive 20% tax relief automatically, while higher earners can claim up to 40% or 45% via self-assessment. You can contribute up to £60,000 a year (or your total earnings, whichever is lower), and even carry forward unused allowances from the last three years.
Research your workplace pension, many employers offer schemes where they will match your contributions. This can be a great way to grow your pension pot while reducing your taxable income.
When you retire, you can withdraw up to 25% of your pension savings tax-free, providing a helpful financial boost without increasing your tax bill.
Using tax-efficient investments
Investments can be a powerful tool for managing your tax liabilities.
With an Individual Savings Accounts (ISA) you can save or invest up to £20,000 annually without paying income tax, capital gains tax or dividend tax on your returns. There are several different types, so you will need to review your circumstances to see which suits your needs.
If you have assets to sell, spreading the sale of these over multiple years to make the most of the annual £3,000 capital gains tax (CGT) allowance. Be aware that the CGT limit has the potential to change though.
Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) offer tax relief, such as up to 30% income tax relief and CGT exemptions. However, these are higher-risk investments and not suitable for everyone, though they can be a good fit for those who can tolerate the level of risk.
Working with an Accountant
Navigating the complexities of financial planning and tax rules can be daunting. That’s why it can be useful to work with both a Financial Adviser and an Accountant to utilise their combined expertise.
Accountants focus on ensuring compliance with tax laws, optimizing tax savings and managing financial records. Financial advisers, on the other hand, provide strategic guidance on investments, pensions and achieving your long-term financial goals. While accountants ensure you’re taking advantage of all tax reliefs and allowances, financial advisers help structure your investments and pensions in tax-efficient ways. Together, they help safeguard your financial future.
Finding the right Accountant
Many financial advisers will have accountants they can recommend, however, if you would like to find your own, there are ways you can look to see if they will be the right match.
- Look for accountants accredited by bodies such as the ACCA or ICAEW.
- Recommendations from friends, family, or trusted advisers can point you toward reliable experts.
- Read Reviews and online testimonials that can give you a sense of their service quality and reliability.
- Meet before you commit. Talking to the Accountant can help you gauge whether they’re the right fit for your needs.
At Furnley House, we understand the importance of making informed financial decisions and we’re here to support you every step of the way. Let’s work together to make your financial future brighter and stress-free.
The value of your pensions and investments can go down as well as up and you may get less than you invested.
