The majority of us protect our future by investing in property and accumulating equity and rental income. Have you ever considered investing in a pension? There is an immediate tax advantage of 45 per cent if you are higher rate tax payer and a 20 per cent government incentive if you are a basic-rate tax payer.
For Example, Mr. John earns an income of £60,000. He invests £20,000 in a pension. His £20,000 pension investment is topped-up by the government to the tune of £5,000. The value of his pension fund is £25,000. He saved higher rate tax on £20,000 - that is 20 per cent of £20,000 which is £4,000. This means he is better off by £9,000 which is a 45 per cent windfall.
Even if your pension fund goes down by 20 or 30 per cent you will still be better off and, long-term, you will be accumulating a strong pension fund to protect your retirement.
Advice for employees
If you are employed by a company of less than five people a company pension plan may not be available. You can, however, invest in a personal pension plan.
Advice for employers
If you employ more than five people have you considered starting a company pension scheme? It is a chance for you to reward your team without any negative tax implications either for your business or your employees. The big advantage is that your company will SAVE money in corporation tax
