Maximise your allowances

According to a recent report by Aviva*, 50-year olds are typically relying on downsizing, receiving an inheritance or – believe or not – winning the lottery to fund their retirement. And the same report cites a typical peak earnings age at age 51, only 12 % of people say they have or would pay more into a pension scheme at that time. It’s concerning to think how ill-prepared we are for retirement, given that as a nation we are living longer.


So, if we can’t change this trend, what can we do to maximise the return on our investments? Well, one thing we can do is to diversify. Why? Because by diversifying – investing in a variety of different products and solutions from deposit account to equities –  we can maximise the tax allowances across the board. Conversely if we only utilise a narrow product range, then we benefit from fewer tax allowances.

Tax allowances from the 2017 budget (effective: 2018/19)

Basic rate of income tax = £11850

Depending on how you structure your retirement income you or your partner may not always be maximising this allowance. This may need reviewing.

Basic rate of capital gain tax = £11700

So, things that could utilise this tax allowance could include investment property, shares and unit trusts – for example.

Dividend allowance = £2000

For example, yield from shares.

Savings allowance = £1000

Deposit accounts, for example.


Total = £26,550

As long as your products and solutions are diverse enough to span these allowances you can take advantage of £26,550 per annum, potentially tax-free.  That means a married couple could enjoy £53,100 of income before potentially paying tax, even if they do not earn equal amounts. By making sure that you have a wide range of a products and services that can take all of these allowances you will be able to maximise your tax-efficiency.

So, whether you find yourself in this situation by accident or by design, to make sure that you are maximising your income in retirement, please – seek proper financial advice.

The sooner you see a good Financial Advisor the better prepared you can be. The tax allowance example is a simple illustration of maximising your assets. There are many more useful financial planning tools that we have in our armoury but before we give advice it is important to understand you – and what you want out of life.

Please get in touch and I’ll be happy to arrange a no obligation call or meeting with you if you’d like to know how to maximise your assets.

Yours, John.

The tax treatment is dependent on individual circumstances and may be subject to change in future.

The value of units can fall as well as rise, and you may not get back all of your original investment.

*Source: Aviva: Real retirement report 2017