Date
16 May 2024Category
Retirement PlanningAs is quite often the case at the start of a new tax year, pensions have been a point of discussion in the past month. This is largely in response to a rise in the State Pension being implemented and the announcement of an extension of the income tax threshold freeze.
While the State Pension increase has provided some good news, the freeze has been met with significant criticism. This is largely down to the impact it has on pensioners, who haven’t benefited from the recent National Insurance cuts and are also having to contend with the economic pressures. So, what is the latest with regards to pensions?
The Government recently announced that the current freeze on the threshold for when people start paying income tax on their pension income will be extended until 2028.
It has been estimated by the Resolution Foundation in their March briefing that the average taxpaying pensioner will be £1,000 poorer by 2027-28 due to this freeze. 1
Understandably, this will have a big impact on those close to/planning or currently enjoying retirement.
As a means of providing a boost for those accessing or accruing their pension, the State Pension rose by 8.5% on 8 April 2024, in line with the amount that wages increased by. This is due to the pension triple lock, a safeguard introduced in 2010 to guarantee that the State Pension would increase annually based on whichever of the below three measures were higher:
With the above in mind, individuals will rightly be looking at what they can do in order to supplement their pensions. An alternative method for maintaining wealth in retirement are Individual Savings Accounts (ISAs). Like pensions, these have been a focal point of late.
Since April 6 2024, it has been possible to spread your annual ISA allowance of £20,000 across numerous ISAs of the same type. As any income received from an ISA is not subject to income tax, they can be a useful method of receiving tax-free income at any time.
Another outcome of the 2024 Spring Budget, was that there is also the possibility in the future of there being a British ISA which would give an extra £5,000 allowance, on top of the £20,000 mentioned above, to invest in UK shares. This is currently in its consultation period until Summer 2024, and further detail is expected shortly after this point.
If you would like to discuss alternative methods of maintaining your wealth or retirement planning in general, please speak to a member of our specialist Wealth Management team.
[1] Back for more? (resolutionfoundation.org)
Information correct at time of publishing, but may be subject to change in future. This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek professional advice before taking or refraining from taking action on the basis of the contents of this article.
Azets Wealth Management is a trading name of Azets Wealth Management Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Bulman House, Regent Centre, Gosforth, Newcastle upon Tyne, NE3 3LS. Company Number 05674020. Incorporated in England. Azets Wealth Management Limited is a subsidiary of Azets Holdings Limited.
