Experts are reminding Britons of seven “tricks” that could significantly increase their retirement savings in the coming years.
Recommendations include increasing pension contributions, using ISAs and taking advantage of tax relief, including capital gains tax (CGT) and inheritance tax (IHT).
Here’s a full list of seven “tricks” people can use to ensure they keep more of their retirement income, according to The Stock Dork:
- Maximizing pension contributions before retirement
- Use of the allowance for personal savings
- Use of dividend
- Consider ISA standards for tax-free income
- Strategic planning of selections
- Use of capital gains tax credit
- Consider inheritance tax planning.
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Experts share the best ways Britons can boost their pension
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Pension contributions
Contributions to retirement savings are tax deductible, with the government adding relief at the top rate of income tax.
If someone works part-time or consults, experts suggest they continue to contribute up to your annual allowance, which is currently set at £60,000 depending on earnings.
Personal savings allowance
This allowance allows basic rate taxpayers to earn up to £1,000 in savings interest tax-free. Higher rate taxpayers can earn up to £500 tax free.
Through the Personal Savings Allowance, future pensioners will be able to ensure that part of their income is not taxed.
Dividend contribution
When one owns dividend-paying stocks, it is vital that the annual dividend allowance is fully utilized
For this tax year, the initial dividend income of £1,000 is tax free, which can be a useful source of retirement income for years to come.
Is like
These are savings accounts that allow people to put money away without worrying about having to pay tax unless it goes over a certain amount.
Britons invest up to £20,000 in an ISA each year, and all interest, dividends and capital gains within the ISA are tax-free.
Choosing a pension savings
If someone is planning to withdraw money from a pension fund early, experts recommend withdrawals within the basic tax rate to minimize the tax liability.
In addition, it is also suggested that people take up the 25 per cent tax-free lump sum option, which means it is possible to access a portion of their pension with money lost to HM Revenue and Customs (HMRC).
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Those nearing retirement are encouraged to take advantage of the tax exemption
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Capital gains tax
Anyone in the process or planning to sell assets should make sure they take advantage of the full CGT allowance, which is £6,000 for the coming tax year. By spreading the sale of property over several years or by transferring property to a spouse or partner, it is possible to save as much as possible on tax.
Inheritance tax planning
The use of contributions, gifts and trusts could significantly reduce someone’s IHT liability, which in turn could increase their retirement income. Currently, the current nil rate is £325,000 with an additional nil rate band of £175,000.
Adam Garcia, financial expert at The Stock Dork, urged Brits to use these hacks to boost their retirement savings as quickly as possible.
He explained: “Retirement should be a time of relaxation and enjoyment, not financial stress. By implementing these expert-recommended tax strategies, you can make the most of your retirement and savings and ensure you have more money to enjoy your golden years. Get started plan today to keep more of your hard-earned money where it belongs—in your pocket.”