As we move into 2011 one topic which is uppermost in many people’s mind is that of taxation. Although proposed changes in income tax and pension contribution tax relief have not yet been made clear, we can be certain that the Government is determined to prise more money away from us and not less!

VAT now stands at 20% and we also know there will soon be a significant number of additional people paying tax at higher rate, given the imminent lowering of the 40% threshold. Also, if you are using a pension plan to fund your retirement, there will be a significant change in the amount which you can pay into that plan, whilst still receiving tax relief. We will ensure you know more, as soon as we do!

Meanwhile, April brings to a close the opportunity to take up your ISA allowance for 2010/11. With the allowable contribution currently at £10,200 it is worthwhile considering this option as a way of ensuring tax free growth in the future.

Another change coming later this year is the removal of the option to Contract-Out of the State Second Pension. At this point in time, it is difficult to be confident about whether it is prudent to Contact back into the State Scheme, as much will ultimately depend upon the position of future Governments regarding State Pensions, as well as the direction that inflation might take.

Currently our personal view remains that, if the Government will allow us to retain some of our National Insurance contributions in order to put this money directly into our own pension scheme, then at least we can continue to exert some control over that money.

Finally we are increasingly being asked for advice by parents and grandparents about the tax implications of providing financial assistance to dependents. Don’t forget that every year you are allowed give away £3000 under Inheritance Tax Planning and one potential home for this money could be a young person’s pension, for which the Government will also allow you tax relief.

If you have any questions on the matters raised in this newsletter (or any other tax issues which affect you) we are available to help in any way possible.

Please use 0845 604 6285 to contact us with any queries or, alternatively you can send an email to: advice@argylefinancialgroup.co.uk

Skype service:

If you would like to speak with Jean or Phil face to face, please let us know and we will provide our SKYPE details.