Pension or ISA? Which is more suitable for you?

In May 18, 2016
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9584116_sNew products are being created, allowances are being increased and the mantra is ‘Pensions are complicated, ISAs are simple’. But is that really the case? Let us at Redwood Financial guide you through this complex area, starting with the basics.

Pensions

Pensions have long been considered more complex, however with added intricacy, comes potentially greater reward, long term:

  • Perceived freedom – no need to buy an Annuity.
  • Changes to Taxation on death benefits – Pensions have never been more IHT efficient. In effect, a Pension fund such as a SIPP, becomes a tax-efficient family Trust fund that can be passed on down the generations to a variety of beneficiaries.

ISA’s

ISA’s are generally considered easier to set up and manage:

  • ISA’s are taxable as part of your Estate, which could potentially mean an increase in Inheritance Tax.
  • However, importantly, withdrawals can be made tax free.

Inheritance Tax

The Government has forecast an increase in Inheritance Tax from £3.8bn 2014/15 to £5.6bn by 2020/21. HMRC has also announced a record level of Inheritance Tax, £4.6bn for the last year.

Recently, the Pensions Minister made a keynote speech suggesting it might be better to spend your ISA funds and even sell your house, leaving the Pension as the tax wrapper of last resort, due to the IHT efficiency, but do you need to go to these lengths?

With forward planning and our expert guidance and friendly service at Redwood Financial, we can ensure that your wealth remains with your loved ones and not in the hands of HMRC.  To book an initial call with one of Advisors – email Steph at, steph@redwoodfinancial.com or if you would prefer, we are based in the Hampshire countryside and would be delighted for you to visit us.

 

Disclaimer
Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. Past performance is not a guide to future performance. Tax rules can change at any time.

Please remember your home or property may be repossessed if you do not keep up repayments on your mortgage.  We give clients the option to pay for mortgage advice by fee rather than commission. Equity Release refers to lifetime mortgages. To understand the features and risks, ask for a personalised illustration.

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto Enrolment, Tax Advice and Estate Planning.

The opinions contained within this blog, do not constitute financial advice and no action should be taken based on this content alone.

 

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Statement

Redwood Financial Family Wealth & Estate Planners Ltd is Directly Authorised and regulated by the Financial Conduct Authority. FRN number 774469.

Disclaimers

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto-Enrolment, Tax Advice and Estate Planning. Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. https://register.fca.org.uk/

Contact us

Telephone: 01489 877547
Email: info@redwoodfinancial.co.uk

Company information

Redwood Financial Family Wealth and Estate Planners Ltd Company Number: 08926661
Registered Office Address: Wellesley House, 204 London Road, Waterlooville, Hampshire,