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Digital Subscriptions > Campbeltown Courier > 23 February 2018 > WILLIAM DUNCAN & CO


“What do you mean my pension is taxable…………!??”

This is the sort of “pubtalk financial advice” we sometimes have to respond to from people who believe that when they reach the blissful horizon of retirement they can draw down their state pension and any personal pensions and not worry about paying tax. Disabusing them of this notion sometimes requires the patience of Solomon and the diplomatic skills of Donald Trump who would simply tweet – “Pensions are taxable – end of”.

My equally brief reply tweet would be “Not so!” There are several ways in which you can mitigate this position if you plan well in advance. For example income and capital gains from ISA’s are not taxable and there are additional tax allowances available on dividend income and on savings income. If you have investments and can lock in some capital gains each year then there is additional tax relief available. Income tax generally kicks in above the level of the personal allowance (£11,850 from 6 April 2018) but with careful structuring it is theoretically possible through a mixture of pension income, savings income, dividends and capital gains to earn just over £30,000 of taxable income in 2018/19 without incurring any tax – and that is excluding the ability to earn income and realise capital gains tax free through holding ISA’s. However, to work towards this will require some very careful planning over a number of years working with both your IFA and your accountant. It goes without saying that it is rarely too early to start on that planning route.

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