Page 20 - Budget Newsletter 2021

£2,000 of dividends before paying any dividend tax, regardless of your personal tax rate. While dividends fell
sharply last year in the wake of the pandemic, they are now recovering strongly.

PLANNING POINT

If you have not yet arranged an ISA or invested up to the 2021/22 maximum, think about doing so. If you are
unsure where to invest at present, you can always leave your money on deposit, even in a stocks and shares
ISA. Just don’t expect it to earn much interest.

Drawing your pension

If you are due to start drawing an income from your pension plan, make sure that you take advice about your options.
When the new rules were first introduced the Government launched Pension Wise (now part of the Money and
Pensions Service) to help people through the complexities, but this service only offers guidance, not personal advice:
you will still have to make the final decisions. The Pension Wise guidance does not attempt to integrate pension
choices with your other financial planning, e.g. estate planning.

If you think how long you might live with the cost of a wrong choice, it is clear that getting independent advice is the
route to take.

PLANNING POINT

The changes to the death benefit rules on pensions from 6 April 2015 mean your pension plan could provide
income for future generations, as your beneficiaries will be able to pass the remaining fund to their children and
so on down the line. One consequence is that from a IHT planning viewpoint it can be better to draw on – and
even run down – non-pensions assets in retirement rather than use your pension arrangements as a source of
income. The further freeze to April 2026 in the nil rate band has heightened the attraction of pensions as part of
estate planning.

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