Lee Smythe, of Smythe & Walter financial planners, offers tips on managing your finances better, even in uncertain times.
The Government Spending Review was short on detail, but we can be certain of a few things: times are tough and for most people both taxes and retirement age are on the increase.
This means that there’s never been a better time to review your finances to ensure you’re doing all you can to protect yourself from the Chancellor’s squeeze.
It isn’t all bad. Commitments of £1 billion to a green investment bank and £200 million to offshore wind power are a step in the right direction that will open up opportunities for investors. And, despite the proposed austerity measures, it’s still possible for the average person to shelter savings and investments and reduce the amount of tax he or she pays.
With careful planning, even simple measures can make a huge difference to your overall tax bill.
You can save up to £10,200 in an ISA each year. This is good because any gains or interest received aren’t counted as part of your income and so aren’t liable for tax.
The rules about how much you can pay into your pension fund are being simplified too. From April 2011 the annual limit will be £50,000 – although a reduction for some, this is a higher limit than was expected. On top of that, you’ll get tax relief on contributions at your highest rate, which could now be as much as 50 percent.
You can reduce your taxable income in lots of ways – saving you money – and you can also benefit from investing in the environment and clean energy.
So, do yourself a favour and take the time to have an unbiased review of your finances with an independent financial adviser. You may just find that austerity has a silver lining after all.
Lee Smythe is Managing Director of financial planners Smythe & Walter www.smytheandwalter.co.uk