Budget 2018: Opportunity remains
The Chancellor’s decision to leave pensions alone for the time being offers continuity in planning a tax-efficient retirement
The giveaway Budget? Fiscal Phil, as the Chancellor styled himself, did seem to enjoy the occasion. The usual theatrics accompanied some key announcements, such as the increase of the Personal Allowance to £12,500 and the Higher Rate Tax threshold moving to £50,000, a year ahead of schedule. Taxpayers in Scotland will benefit from the Personal Allowance increase, but will have to wait for Derek Mackay’s equivalent to fully understand their income tax situation, which hasn’t occurred at the time of writing this.
For me, one of the most notable elements of the Budget was conspicuous by its absence. Pensions were left well alone, with higher/additional rate tax relief, the £40,000 annual allowance and the exception from inheritance tax all surviving. For some commentators, these were obvious sources of revenue that could be used to combat
a potential Brexit shortfall, and were up for review. Cue a collective sigh of relief and an appreciation of some continuity in retirement planning.
So what does that mean for the dental profession? With the generous allowances still in place, it presents ample opportunity for a tax-efficient retirement. Private pensions can be used to complement the NHS scheme or to pass funds to the next generation. For those in the dental sector running a private practice, employer payments can be made into directors’ personal pensions, fully deductible for corporation tax. Private pension funding can work well, although care must be taken to account for benefits accruing in the NHS scheme counting towards the pension annual allowance.
The upshot is that there are, as always, opportunities available. The key is being aware of them, accounting for potential pitfalls and planning in advance.
At AAB Wealth, we have extensive experience of working with dentists, from personal financial planning to assisting with
mergers, acquisitions and exits. Let’s ensure you are taking advantage of your opportunities, together.
Andrew Reynolds, Chartered Financial Planner, Anderson Anderson & Brown LLP