Wise Monkey Financial Coaching

You may be missing out on thousands of pounds of unclaimed pension tax relief

Are you missing out on unclaimed money?

While celebrating the success with a client of her new job and impressive payrise, I suggested she ask some questions of her existing pension provider, and the pension provider at her new job, to explore her options.

During our discussion, I asked whether she was claiming higher rate tax relief on her pension contributions. She wasn’t aware that this was something she needed to do. She didn’t know she could claim, or that it was up to her to claim. Nor that by not claiming she could have been missing out on thousands of pounds.

Self-assessment and tax relief on charitable donations

While December is a month of splurging, January is typically associated with cutting back – whether that’s on food, alcohol, or spending.

If one aim this year is to improve your financial situation, increasing income is just as important as reducing spending. One area often overlooked is finding ways to claim everything you’re entitled to. This is especially important if you’re one of more than 10 million people completing their self-assessment tax return ahead of the 31 January deadline.

Self-assessment

Self-assessment is a system used by HMRC to collect tax. If you’re an employee, tax is usually collected automatically from your monthly salary and shows up on your payslip. But if you’re self employed, or have additional sources of income such as savings interest or rental income, you have to declare your income to HMRC and offset against that any expenses that attract tax relief. The more tax relievable expenses, the less tax you have to pay, which means more money in your pocket.

So when you’re completing your tax return it pays to make sure you’re claiming all the tax relief you’re entitled to.

Does auto-enrolment apply to me?

If you're the only director of your own company, you don't have what the regulators call 'auto-enrolment duties'. That means that you're not obligated to pay into a pension contribution for yourself. But this doesn't mean that you can ignore the letters that come through the post.

All you need to do is...

Pensions just got more flexible

Spring has sprung and this April has brought us not only sunshine, but something even brighter - big changes in pensions!

Fundamental reforms, introduced in the 2014 Budget, come into effect this month. But if you don't have a clue what these changes are, you're not alone. To understand the implications, we need to take a step back and clarify some pension jargon. There are two main structures of pension provision....

The first is known as ‘defined contribution’, or ‘money purchase’ where you, the employer, or both, pay in a set amount each month. The fund grows and you end up with a pot of money at retirement. But the size of this pot isn’t fixed - it depends on how much is put in when, investment returns, charges etc. And the pension income you end up receiving is unknown until you start drawing from this pension pot.

The second structure is a ‘defined benefit scheme’, known as a ‘final salary pension’, which pays out a guaranteed level of pension income based on your income when you retire and the number of years you’ve been working.

Most people today are in a ‘defined contribution’ scheme, and the current reforms are mostly in relation to this. So what’s changed?...

“ISAs are now NISA”

The new version of Individual savings Accounts (ISAs) came out today and are now, imaginatively, called New ISAs or NISAs.

What is a NISA?

ISAs have always been a tax-efficient way of investing money either regularly or ...

Life after financial crisis

It’s fantastic to hear about how people’s lives change through working on their relationship with money. An inspiring review on Amazon recently told how reading Sheconomics, combined with some one-to-one financial coaching, transformed one woman’s life. She cleared her debts and is hugely excited about being back in control financially.

But the next stage is even more exciting - doing some financial planning to help clients achieve their big dream. Here’s three steps to get you started…

Pay more into your pension to save your child benefit

The government’s just announced that parents who are higher rate tax payers (currently those earning more than £43,875 a year) will have their child benefit axed from 2013. The benefit will be stopped even if only one parent falls into that tax bracket. This will affect families with only one parent working the most. Hmm… I can see this affecting lots of women.

But… wait for it, there’s some good news.

Being in the black is the new black

After two years of fun writing, we're excited to say that Sheconomics, is finally on the bookshelves! We were lucky enough to get a double page spread in The Times about the book, written by Carol Midgley.

If you don't subscribe to The Times you won't be able to read the article in full, so here it is...

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