What's important to you

Should I always pay into my pension with any spare cash?

One way to attempt to achieve your longer term financial goals is to boost your pension savings.

Pensions are a long-term investment. The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits, which isn’t guaranteed, and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.

Contributions are free from income tax and any growth generated within the plan – whether that is capital growth or dividends reinvested – is free from tax, too. However, you should be conscious that there is a limit to how much you can put into a pension in any one tax year (called the annual allowance), and a separate limit on how much you can save over your lifetime (called the lifetime allowance).

Depending on your situation, tax may be due when you come to withdraw money from your scheme.

What if my circumstances change?

Life is ever-changing. Even if your dreams and hopes never change, your needs are likely to evolve as you journey along life’s path. And you can’t assume your life will be an unwaveringly straight arrow, always heading in the same direction. Sometimes life presents us with exciting opportunities. Sometimes it presents us with worrying challenges.

To make sure your plan remains relevant and on track to helping you achieve your dreams, our ongoing advice service is designed to support you throughout that journey. We could be there in the good times and the bad, aiming to offer the right advice at the right time. And if your dreams or goals change, we could be there to help you adjust your financial plan.

Through developing a long-term personal relationship, your adviser can offer their best insights to support your financial wellbeing and peace of mind.

What's important to you

How can I invest tax efficiently?

Over the years successive governments have created various tax-efficient savings regimes to encourage us to put something aside for the future. The two most commonly used are:

ISAs (individual savings accounts) which allow you to save or invest up to a set limit each tax year: this year it’s £20,000. Once saved or invested within an ISA, any income or capital growth is free of tax both within the account and when you decide to take it out.

Pensions allow you to save for your retirement by putting money in your pension pot free of income tax. Again, any capital growth or income reinvested is free of tax. However, you cannot access your savings until you reach the age of 55 (although this is due to rise to 57 in 2028). When you come to withdraw your investments the first 25% is tax free and the remainder is taxed as normal income.

Are onshore bonds tax efficient?

Onshore bonds are a type of life insurance policy that allow you to invest tax efficiently. This is because any income or capital growth within the bond is taxed at the corporation tax rate of 20%. HMRC regards this as equivalent to the policyholder having effectively paid capital gains tax (CGT) and basic rate income tax.

Basic rate taxpayers have no further tax liability when withdrawing from an onshore bond.

You can also withdraw up to 5% of the initial premium every year tax free as this is simply taking back your funding capital. Anything above this is taxed alongside your other income so for a higher rate tax payer this could mean an extra 25%. The bond pays out any remaining balance either on the maturity date or when you die and any gains will be taxed as income.

They usually comprise between 20 and 100 segments, which can be cashed in at any time; either singly or in total. The same rules apply: any profits are taxed as income if you are a higher rate tax payer.

What's important to you

Is protection insurance expensive?

We believe having the right protection in place can be the cornerstone of a holistic financial plan, yet is a need that is often overlooked. Thanks to our existing relationships with Scottish Widows and Legal & General we could help provide financial protection for you and your family.

But what makes us unique is that we won't charge you payment or commission when you purchase protection products.

By removing commission payments, the amount it costs for the insurer to cover you is the price you'll pay. It's important to us that we invest our time to help address the protection gap that exists in the UK today.

Plus, we employ our advisers so they're rewarded for meeting your needs, rather than selling products.

Can protection products reduce inheritance tax?

A life insurance policy could cover the cost of an inheritance tax (IHT) bill rather than it being paid from your savings or sale of assets when you die. Even better, if you place the policy in trust, it will be paid outside of your estate, therefore not incurring any further IHT.

The downside of placing your life insurance policy in trust is that it can be difficult to amend or remove from trust once it's set up. There are circumstances under which changes to the policy can be made but you may risk invalidating the cover. Certainly, it's best to consult your solicitor before making any alterations to your policy.

Life insurance is designed to pay out a lump-sum when you die. You can state that you wish your loved ones to use this money to pay part or all of the IHT when you die. This could provide valuable peace of mind that your family should be able to cope from a financial perspective when the worst happens.

Tax treatment depends on individual circumstances and may be subject to change in the future.

What's important to you

What is inheritance tax?

Inheritance tax is the tax on the estate of a person that has passed away. The word estate sounds grand, but essentially this covers money, possessions and property. Collectively, these are known as your assets.

The standard rate of inheritance tax is set at 40%. The threshold is £325,000. So, if your estate is worth less than this amount (known as being below the nil-rate band), then there will be no tax for your family to pay when you die.

Married couples and civil partners can inherit their spouse's entire estate tax free. The surviving spouse can also now add any of their spouse’s unused IHT allowance to their own to increase the potential nil-rate band of their estate.

If none of the first spouse’s tax free allowance is claimed, this means a couple can effectively pass on £650,000 before inheritance tax has to be considered.

Can I pass on my wealth whilst I still alive?

Yes. Not only are there many tax efficient ways for you to pass on your wealth sooner rather than later, but you get to see the difference your money can make to your loved ones whilst you're still around.

You could help to give your child or grandchild a head start in life by planning for their future today.

Trusts can be particularly effective if grandparents wish to pass money down the generations tax-efficiently. Starting a pension for your child has many benefits too, both in terms of tax savings and compounding returns (the series of gains or losses on an original amount of capital over a period of time).

Junior ISAs (JISAs) also allow you to take full advantage of tax allowances by making sure that the allocations for children and both parents are effectively used each year.

Tax treatment depends on individual circumstances and may be subject to change in the future.

What's important to you

Do you know how many pensions you have?

Throughout your working life you may have a number of jobs leaving you with different pension plans to manage. This can make your pensions difficult to track with potentially higher costs, funds you no longer want to be invested in or poorer performance.

Consolidating your pension could also help you answer these three important questions:

1. How much do I need to retire?

2. What have I already got in my pension pot?

3. Am I on track to have what I need when I’m ready to retire?

Bringing your pensions together could give you a greater overview of everything you have saved, potentially reduced charges, and less paperwork.

Are pensions the best way to save for retirement?

For most people, yes. And that's because of pension tax relief. One way to view this is the Government rewarding you for saving for your future. To encourage people to contribute to their pensions, some of the money that would otherwise have been paid to the Government in tax is added to your retirement pot. For example:

- Basic-rate taxpayers get 20% pension tax relief

- Higher-rate taxpayers get 40% pension tax relief

- Additional-rate taxpayers get 45% pension tax relief

Pension relief is calculated slightly differently in Scotland.

So, if you are a basic-rate taxpayer and you pay £100 into your pension every month, the actual cost to you would be £80 as the Government will add a further £20.

Some workplace pensions use a different method to claim pension relief so it’s worth checking with your employer to understand if you need to take any action.

High earners need to be aware that their tax relief may be cut back – speak to one of our advisers about how it could affect you.

Please be aware that pension and tax rules change depending on your circumstances.