With the new tax year and lower tax relief on pensions only days away, now is the time for personal pension holders to up their contribution.
A lump sum paid into a personal pension by April 5 attracts 23 per cent tax relief for a basic rate tax payer. But on April 6, this falls to 22per cent..
Employees who contribute before the end of the tax year pay in to their pensions net of basic rate tax. Leave it a day, and the tax has to be reclaimed from the Inland Revenue.
The new tax year will also be the last one where carry back rules are in effect, which means that anyone who has not used up their tax relief in the last six years should take the opportunity to make up their payments before it is too late.
Legal & General says to get the most out of a pension you should consider paying in a lump sum, or a lump sum in respect of the last 6 years before April 5, and if you have money available increase your regular pension contribution.
The advice of the Association of British Insurers is to seek independent financial advice if you are concerned that you are missing out on tax breaks.