Planning for retirement

Planning for retirement for those with adequate financial resources will involve how funds are applied to investments, pension planning, long-term care and capital protection.

However, there are a few simple tax savings steps that all married or civil partners should consider to ensure that they pay no more tax than is appropriate for their circumstance.

The “simplified” tax system we all now endure has seven different rates of tax ranging from 0 per cent through to 50 per cent, and the new abatement of the personal allowance for those with sufficient income produces a marginal tax rate of 60 per cent.

Clearly, it’s more important that partners ensure that any difference in their marginal tax rate is minimised. Even for partners with relatively modest resources the savings can easily amount to thousands of pounds.

What is needed is a proper review of income resources to ensure that sufficient income arises in the hands of the partner with the lower marginal rates of tax.

Capital gains on realising assets may arise infrequently – but again, each partner is entitled to an annual tax free capital allowance of £10,000. As a recent case before the Tax Tribunal demonstrated, simply sharing the proceeds does not achieve any tax saving.

Once again it’s important that the ownership of the assets is shared appropriately. Whilst not as significant, the marginal tax saving can be more than £2,800.

As regards passing on your estate and the impact of Inheritance Tax, it’s regularly reported that 70 per cent of the adult population still does not have a will. A simple will is inexpensive and naturally leads to possible lifetime planning to mitigate the Chancellor’s shot at removing the coin from your pocket.

Will Campbell
Beever and Struthers