For those that are subject to the tapered annual allowance and are already taking advantage of an Isa, Mr Wright points to venture capital trusts as being “extremely valuable”, although those that do make use of them should proceed with caution.
He explains: “While many are familiar with the tax relief received upon making a new VCT investment, this should arguably not be viewed as the primary advantage of these structures.
“After all, the relief only applies to encourage investment in what would otherwise be a relatively high-risk holding.
“Investing in VCTs for the tax-free dividends they provide leads to them being viewed as an income generator, alongside pensions and Isas.
“Treating VCTs this way is best taken advantage of with regular investments over multiple years.
“This also serves to further diversify, and therefore lessen the overall risk of the proposition.”
Take it forward
When it comes to building pension provision, carry forward can be a very useful tool as, in addition to any unused annual allowance from the current tax year, savers are able to take advantage of any unused allowance from the three years previous.
Curtis Banks’ Ms List highlights: “We’re now in the last few weeks when people can use any remaining allowance from 2016-17.
“Remember that clients have to fully use the current year’s allowance first before using carry forward.
“It’s also important to remember that carry forward gives clients additional annual allowance but does not affect how much tax relief they’re entitled to – this will still be based on their earnings in the current tax year.”
According to Intelligent Pensions’ Ms Tait, carry forward is particularly relevant for any clients who have received a bonus or lump sum payment, or self-employed clients who are likely to see unusually high profits in this tax year.
Meanwhile, Mattioli Woods’ Mr Wright adds that it could be especially useful where the client would benefit from their pension scheme purchasing a commercial property and needs the requisite funds to do so, for example.
“Tax relief on employer contributions is not restricted to the client’s relevant UK earnings, meaning the annual allowance is the only applicable restriction,” Mr Wright says.
“Not only can this increase the client’s later-life funding, and increase the level of corporation tax relief that could be claimed by the business, but it can also put the pension scheme in a position to take advantage of self-investment opportunities.”
Beyond the grave
For any long-term saver, the issue of inheritance tax should always form part of their financial planning and for those clients that are in good health, pension scheme contributions can be one of the most effective forms of IHT planning.
