Why you should increase your pension contributions before the tax year ends

The 2023/24 tax year will be coming to an end on 5 April, so if you haven’t already, you should be taking some time now to make sure your tax bill is as low as possible.

But how do you do this?

One of the most effective methods is to maximise your pension contributions, as any money put away is deducted from your taxable income.

If you are a basic rate taxpayer, you will receive an automatic 20% relief on pension contributions, with high and additional rate payers being able to claim even more.

Not only will you now be saving on your tax bill, but you’ll also be boosting your retirement savings, keeping you on track to achieve financial freedom in later life.

You may not feel the need to start saving for retirement yet, but the sooner you start the better, as your money will have longer to gain more compound interest.

We would suggest evaluating how your pension can support your wider financial situation.

However, there is a limit to how much you can contribute whilst receiving tax relief of £60,000 – known as the annual allowance. This means that for higher earners contributions are tapered, with it being reduced by £1 for every £2 a person earns over £260,000.

Increasing your contributions before 5 April puts you in a great position to make the most of your annual allowance.

It’s also important to remember that any money paid into a pension cannot be drawn until you are age 55 (rising to 57 from April 2028).

How WE can help

Managing your tax can be complicated, and it can be difficult to know where to start. That’s why our Wealth Experts are here to support and guide you through the process, helping you reduce your tax liability and keep your finances on track.

Please don’t hesitate to get in touch with one of our team here if you have any questions.