GRANDPARENTS, ARE YOU LOOKING AFTER GRANDCHILDREN AND UNKNOWINGLY GIVING UP PENSION BENEFITS?

Jan 19, 2017 | Tony Byrne's View

More and more grandparents are deciding to help out their children by giving up work to look after the grandchildren, meaning the mother and father can get back to work.

If this is you and you have not yet reached state pension age, you could be giving up valuable future state pension income by not continuing to pay national insurance contributions.

As an example, if a working age grandparent misses out on one year of state pension rights because they are looking after grandchildren instead of working, this could result in lost future income of £231 per year. Over a 20 year retirement this loss would be more than £4,500!

The good news is there is a simple way to solve this issue to ensure you continue to build up your future state pension benefits. The mother of the grandchild that goes back to work simply needs to sign a form that allows a grandparent to receive national insurance credits for looking after the child. The form can be downloaded via the government’s website https://www.gov.uk/government/publications/national-insurance-application-for-specified-adult-childcare-credits-ca9176.

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.

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GRANDPARENTS, ARE YOU LOOKING AFTER GRANDCHILDREN AND UNKNOWINGLY GIVING UP PENSION BENEFITS?

Jan 19, 2017 | Tony Byrne's View

trouser-pockets-1439412_960_720One of the main topics that usually comes up for discussion when I meet business owners is regarding the amount of taxation enforced on them by government, both directly and indirectly. Which leads to the most common question I am asked, ‘as a business owner, how can I reduce the tax I pay?’

You see, there has been much change to the taxes faced by business owners and Directors of limited companies over the last few years. Whilst it is welcome that Corporation Tax has reduced, there are now new tax rates for dividend payments, increases to the minimum wage (living wage) and pensions for all qualifying staff including compulsory company pension contributions to name but a few.

The good news is there are still plenty of legitimate ways to reduce the tax your business pays, meaning more money in your pocket rather than the Chancellor’s!

One of the easiest and most tax efficient ways to release money from your business is to make a contribution into your own personal pension. The contribution is classed as an ‘expense’ therefore the money used is not subject to Corporation Tax, Income Tax or National Insurance. If you’re over age 55 you could even take out up to 25% of the pension immediately, tax free!

Pensions are still one of the best savings products around as money inside your pension grows pretty much tax free and when you are ready to make withdrawals, with some clever planning, you can make the best of various tax allowances that are available.

There are rules relating to contribution levels and a lifetime allowance to watch out for. It is also vital that your pension is invested and managed according to a level of risk you are comfortable with, so please take advice to ensure everything is set up correctly and you are not ripped off by high charges!

Pensions aren’t the only option though, there are still plenty of other strategies that can ensure money is released from your business without incurring tax, especially if you are thinking of selling. If you want to find out more, please get in touch. We are running a special offer for business owners, details of which can be found below.

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.

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