You could be one of the UK’s higher-rate tax payers missing out on £225 million in tax relief each year by not paying in to a pension. The insurer Prudential recently surveyed 302 higher-rate tax payers and found that 1 in 10 make no contribution to a pension. Rolling this figure out nationwide at least 90,000 higher rate taxpayers could be paying nothing into a pension, this equates to missing out on £2,510 in tax relief a year.
Are you simply not exploiting your allowances?
Many Contractors find themselves in a higher-rate tax bracket but are simply not exploiting their annual allowance. This is despite the fact that Pensions represent one of the few remaining tax breaks to self-employed Contractors, whether you are inside or outside IR35. The Prudential’s research found that the average saving of those higher-rate tax payers amounted to £523 per month or £6276 a year, this is considerably lower than the £40,000 allowance. People are simply failing to capitalise on the opportunities to receive the extra support that tax savings offer towards their future retirement income.
Are you paying substantial amounts of tax unnecessarily?
Unlike regular “permie” employees who are members of occupational pension schemes and are entitled to receive basic and higher-rate tax relief through their payroll, Contractors contributing to a personal pension scheme or a self invested personal pension may only be receiving basic rate 20% tax relief as you have to claim back the extra 20% tax relief for being a higher rate tax payer through your self-assessment tax return.
Our trusted Advisers at ContractorFinancials actively encourage Contractors to exploit the rules and even get the equivalent of up to 69% tax relief. This would effectively mean that for each £100 invested, you would pay £31 and the tax man pays the balance. ContractorFinancials are very familiar with the working status of the self-employed Contractor and some of the complexities that surround the nature of your work. The specialist Advisers are able to support you to maximise your full pension capability with the following measures:
If you feel that you are one of the UK’s higher-rate tax payers not exploiting the tax relief available to you, the specialist Pension Advisers at ContractorFinancials can help you benefit from some of the £225 million pot. Contact the Advisers today on 0208 090 0702 or email firstname.lastname@example.org.