Lets be honest, nobody likes going to the dentist. Fortunately, my last visit to the dentist was to discuss tax planning and not the state of my teeth.

 He has seen many changes to the tax landscape over the 20 years he has run his practice, but is particularly unhappy how he is being targeted by the recent changes to the income tax regime. The combination of losing his personal tax-free allowance and the introduction of the new 50% income tax band has left him almost £6,000 worse off this year.

 He told me that he had various advisers over the years so his financial affairs are all over the place, policies here and there with no overall planning or strategy. I told him that we work with our clients to provide a holistic service by developing their life plan.

 We talked through some of the tax planning options open to him, many of which he knew about, such as Venture Capital Trusts (VCT), Enterprise Investment Schemes (EIS) and pension contributions. Above and beyond these mainstream options, we work with a number of tax planning specialists to offer bespoke advice to our clients.

 After another meeting, this time at our offices, we introduced the dentist to a solution perfect for someone in his profession. He was extremely happy, “I was looking for ways to offset the extra £6,000 tax I was paying this year, but in fact I have reduced my tax bill by significantly more”.

 If you would like to know how to reduce your tax bill we might be able to help. Call me today for a free no-obligation consultation on 0844 848 2277.

If you are making pension contributions from your net salary, even after the tax relief you receive you have not made up the deductions in your wages. The key is National Insurance Contributions (NIC)!

Let me give you an example…

You are a higher rate taxpayer and you are making net monthly contributions to your pension of £500.

With basic rate tax relief the gross contribution to your pension is £625. Add to that the higher rate tax relief of £125 that can then be claimed through an extension of your tax code or through self assessment, and you receive total tax relief of £250.

Sounds a good deal right?

Wrong! The gross salary you have used to pay that £500 contribution totals £847.46 when you take account of income tax and NIC at your marginal rate.

Salary Sacrifice could add over 25% extra to your pension!

Now consider that your employer makes a contribution to your pension of £847.46 which puts you in front straightaway.

The employer can offset the pension contribution against corporation tax AND also saves employers NIC of 12.8%. Persuade your employer to add the NIC savings to your pension contribution and this will result in a total contribution to your pension of £955.93.

That’s a surplus of £205.93 going into your pension each month, 27% higher than the personal contribution from your net wage!

If you want to make your pension contributions work harder for you, call for your free consultation on 0844 848 2277.