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Jays Accountants recommend that everybody should consider their pension provision for when they retire otherwise you might find that the State Pension could leave you short of funds to live on.

Check your State Pension forecast here: https://www.gov.uk/check-state-pension

We are not authorised to provide advice on Pension Schemes but can provide advice on the tax benefits you will get from HM Revenue & Customs.

Key Benefits

  • Payments made into a pension scheme will receive another 25% from HM Revenue & Customs.
  • If you don’t work, you can still put in a maximum of £2,880 pa and HMRC will give your pension another £720!
  • If you pay higher rate tax – say at 40%, then you get even more tax relief. For example, if you paid in £800, then HMRC will pay in £200 PLUS your tax bill will reduce by £200 – that is a £400 benefit to you from just an £800 investment.

Things to Know

  • You cannot draw your pension money until you reach the age of 55 years;
  • When you draw on your pension fund, 25% of the amount drawn will be tax free, the rest will become taxable income. Tax on the remaining balance may be payable if you have already used your personal allowance for the tax year.
  • Once you draw on your pension fund, a restriction of £10,000 pa for future pension investments comes into force. So, if you are considering putting in more than £10,000 do not draw on your pension funds.

If you need to find out more about the tax benefits of your pension payments, please do contact us.

If you want to take out a pension scheme or discuss what you already have, you should talk to an IFA who is registered with the FCA. Click here to find out more.