The breakdown of a marriage is a stressful and painful time. Often the most complicated aspect of the arrangements that need to be made is the financial one. Most couples have both liquid capital (i.e. property and savings) and illiquid capital (i.e. pensions) which need to be shared fairly between them. What about the pensions?Some people ar...
With the financial year end fast approaching, make sure that you have invested in your ISA and pension in order to take advantage of allowances and tax breaks.
With the end of the financial year in sight, it is time to start making sure you have invested into your ISA, as if you have not utilised your 2017/18 ISA allowance before the 6th April, it will be lost. Additionally, the same applies to anyone who has not made their pension contributions. This investment limit is not as straightforward as with an ISA; it is recommended to speak to a wealth management expert to understand more about this.
what are ISAs?
ISAs (Individual Savings Accounts) are tax-efficient investments on which you will not have to pay tax. For other investments, you may have to pay tax on the interest or dividends you earn, or on any capital gains made. By investing in an ISA, these taxes are not payable and therefore an ISA is an excellent way to invest to avoid paying additional taxes on the potential income and growth you could achieve.
This year’s contribution allowance is £20,000 per individual, which will remain the same for the 2018/19 tax year. There is no need to wait until the end of the year to make your ISA contribution, however, as if you make next year’s contribution in April, you get an additional 12 months of tax-free growth.
Why save into a pension?
Like with ISAs, pensions are a tax-efficient investment which can grow without the constraints of tax. This will help your investments grow faster, as the gross compounding can make a significant contribution to your long-term investment growth. However, the biggest benefit of a pension is that you are able to claim tax relief on your contributions.
The tax relief on a pension contribution means that a basic rate taxpayer who contributes £800 into a pension will immediately see the value of their pension increase to £1,000. This represents a return of 25%. For additional and higher rate taxpayers, this increases to 60% and 82% respectively. Additionally, when it comes to drawing on your pension, you will receive 25% tax-free.
A man has won equal pension rights for his husband upon his death in a landmark ruling by the Supreme Court. We take a closer look at this pivotal case.
The case was brought to the UK’s highest court by John Walker, a retired businessman in an attempt to secure the same pension benefits upon his death for his husband as would have applied if he was to have a wife in the same situation.
The case came about after it was revealed that there is a caveat in the Equality Act that allows employers to exclude same sex civil partners and spouses from benefits paid into a pension fund before the Civil Partnership Act came into force in 2005. Mr Walker argued that his former employer’s pension scheme was acting unlawfully because it refused to pay his husband the equivalent of a widowed wife’s pension in the event of his death. Before the case was heard, Mr Walker’s husband stood to receive just £1,000 a year pension.
The favourable ruling by the Supreme Court was made on Wednesday 12 July 2017; it was also confirmed that companies taking advantage of the exemption within the Equality Act will be considered as breaking the law moving forward.
As it stands currently, occupational pension schemes usually allow the spouse of a deceased employee to receive 50% of the value of the pension for the rest of his or her life and, were Mr Walker married to a woman, she would receive about £45,700 a year as a widow’s pension.
Mr Walker and Liberty, the human rights group that acted for him, had argued before the Supreme Court that the exemption in the Equality Act is discriminatory and therefore unlawful; a unanimous decision was made in agreement and found that the exemption breaches EU equality laws.