The majority of people will be retired by the time they start receiving their pension and you could have saved up a significant sum of money in the meantime. But moving from a regular monthly income to your pension can be a difficult adjustment for some people.
All that money you’ve saved up in your pension could soon be spent, especially if you are charged at the higher rate pension tax, so how do you enjoy your pension for longer? Well, there’s many ways you can go about stretching your pension and they are all very useful, especially if your find yourself being charged the higher rate pension tax.
Ways To Make Your Pension Last Longer
Few people are prepared for the challenge of managing their pension, you could easily end up spending a huge amount of money very quickly if you’re not careful. After a lifetime of work it’s only natural you’d want to spend some money and treat yourself.
But be careful because if you have a large pension you could see your money cut significantly by the higher rate pension tax. Thankfully there’s a number of ways you can make your pension last longer and we’ve listed some of the best ways below.
Turn Your Hobby Into A Profession
Do you enjoy writing or photography or how about art? Whatever your hobby is there’s probably a way you can turn it into a side job, especially with the internet. Freelancing through online job sites is simple and straightforward and allows you to take on as much or as little work as you want. It might take some time before customers start coming, but eventually, with a little patience, you could make a nice tidy sum which will supplement your pension.
Invest
If you don’t know the rules and strategy involved with playing the stock market then investing might seem a little intimidating at first, but with some research, you’ll likely be surprised how simple it can actually be. There’s always an element of risk involved but if you plan carefully then investing is a great way to supplement your pension.
Claim Tax Back
We know claiming tax back is much easier said than done but you could be due substantial savings on your pension and claiming the tax back is easier than you may think. If you are charged at the higher rate pension tax such as the 40% or 45% income tax then you can claim relief.
You can also claim tax relief if you pay more than 20% income tax and your pension scheme isn’t set up for automatic tax relief. Ordinarily, pension providers will claim tax relief for you at a rate of 20% and add it to your pension pot.
However, this isn’t always the case and either way if you are charged a higher rate pension tax you could still make significant savings. If you do pay 40% or 45% income tax then you should fill out a self-assessment tax return to claim tax back. If you pay 40% you can claim relief on an extra 20% or 25% if you pay 45% income tax. So there are big savings to be made if you are in the higher rate pension tax bracket.
Additional tax relief is possible for some UK non residents who are not living in the UK but still paying UK tax on their pension income.
