Youtor
Why Its Best To Retire At The End Of The Tax Year
>> YOUR LINK HERE: ___ http://youtube.com/watch?v=5vS2xooPuys
If you’re thinking of retiring, knowing which month of the year it is best to retire in can actually save you a lot of money. • Not only that, it can ensure your retirement portfolio is well positioned to maximise your retirement income going forward. • 5 reasons why it is best to retire before the 6th April: • 1. A lower rate of Income Tax. If you are a higher rate tax payer, then retiring part way through a tax year is likely to mean your pension income is taxed at 40% (because it’s added on top of your salary). By retiring and taking your pension income at the start of a new tax year will mean you have no salary to add on and therefore your pension income could be taxed at basic rate 20%. • 2. Full Personal Allowance. Better still, if you have other resources and only plan to make small withdrawals from your pension then you have the full Personal Allowance of £12,500 before you pay any tax on income. Retiring part way through the year will probably mean you have already used up your Personal Allowance. • 3. ISA allowance. If you receive a tax free lump sum from your pension then by retiring at the end of March you will be entitled to 2 x ISA allowances in quick succession. One for the end of the tax year and another right again at the start of the new tax year from 6th April. Currently, that means £40,000 could be invested into tax free ISAs in a matter of days. If you have a spouse, you can also use their ISAs allowances in the same way, meaning £80,000 could be invested. • 4. Capital Gains Tax (CGT) allowance. Similar to the ISA, if you are planning on cashing in investments for your retirement which have made gains, then by doing it at the end of the tax year means you can split your encashments and get a full CGT allowance for the current tax year and a few days later a full CGT allowance for the new tax year. Currently that’s 2 x £12,300 of gains you can release before paying any CGT. Again add in your spouse’s allowances and you can make it £49,200 (4 x £12,300). • 5. Gifting allowance. If you were planning to make gifts on your retirement, perhaps to your children or grandchildren from pension lump sums, then by waiting until the end of the tax year means you get 2 x gift allowances of £3,000 in quick succession. One for the end of the tax year you retire and one for the start of the new tax year. If you have not used your annual gift allowance from the previous year then you could gift a further £3,000 without any Inheritance Tax consequences. Again using your spouse’s allowance as well can mean a total of £18,000 (2 x £9,000) could be gifted in the space of a few days. • So as you can see there is a lot of Income Tax to be saved by choosing March as the month best to retire in. • As a bonus there is also another good reason to retire at the end of the tax year. You will be going into spring so the weather should be warmer and the nights longer with more you can do! • #timetoretire #retirement #whentoretire
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