It was great to see so many IPSE members at our in-person financial health check for the self-employed last week. We were fortunate enough to have the excellent Chase de Vere and Taxd share their insightful insights on the tax system and the many options for saving for later life as a self-employed individual. 

From ISAs and income protection to life assurance and inheritance tax, it was a whirlwind night of wisdom that left an impression with all in attendance.

With the next financial tax year now upon us, we wanted to share some of the top tips that emerged from this event so you can get ahead of next year’s tax planning and aware of your options for later-life planning.

It sounds a little obvious, I know. But making that first contribution towards a pension or setting some money aside for an Individual Savings Account (ISA) will make your life so much easier when you approach your retirement age.

You don’t want to be in a situation where you’re maxing out your contributions in the last few years and not feeling like you’ve saved enough.

With increasing costs hitting everyone’s pockets right now, it’s all too easy to put this to the bottom of your to-do list – especially if you’re worried you may need to access this money in the near future. 

Traditional pension vehicles may not be the option for your personal circumstances and we would recommend you set up a call with a financial advisor that will talk you through the other options available to you.

If you’re in the fortunate position of being able to invest money before the tax year end (before the 6 April), utilising your ISA allowance is a tax efficient way to save for your future.

You can invest up to £20,000 tax free into a cash ISA or a stocks and shares ISA (or both) but you can’t carry this allowance into the next tax year.

Talking about illness, injury or death is never easy and any of us are often put off by the morbid nature of these conversations. But it’s vitally important that we do consider what would happen if, for whatever reason, our income stops or reduces.

You may still have payments for a mortgage, rent or a loan due. You may not have enough in your retirement pot or in savings to cover this sudden change in income.

Having some sort of income protection insurance can mitigate this risk. It’s worth noting that if you’re an IPSE member (excluding Community membership), you will already be covered with illness and injury coverage.

Similarly, life assurance is another option you should consider to protect those closest to you.

If you’re a limited company director, you can even put the premiums through your own company and claim it back against your tax bill as an expense, although it’s worth chatting with a financial advisor about the implications of doing this.

Having a will in place is also critically important. Thinking about how your estate may incur inheritance tax is also a useful exercise (although this is an area that is notoriously complex and certainly one for a financial advisor).

With a new tax year approaching, it makes sense to already begin planning your tax affairs for the next financial year.

Your situation will entirely dictate these plans. You may well need some additional money towards the end of the tax year to put a deposit down on a house, or you may need to show that you have earned more income this year for mortgage purposes.

If you have the profit available, you may wish to take additional dividends in the coming tax year.

Additionally, if you’re at risk of falling into a higher Income Tax bracket, you may want to consider investing more into an ISA or pension.

You may also be filing your first ever tax return in the next financial year and you will need to get up to speed with how and when this will be done. We’ve put together a whole host of resources that can help you navigate this.

You may also wish to explore other savings options that you perhaps haven’t heard of or considered before.

You could contribute to a Junior Individual Savings Account (JISA), which helps you save for your children and grandchildren until they turn 18. You can contribute up to £9,000 annually that is also tax-free.

Similarly, Child Trust Funds are also an option for those looking to put some money aside for your family.

Almost all of the above tax tips rely on you having a clear understanding of your financial situation. 

Implementing effective tax planning strategies does come with risk and that’s why we’ve partnered with independent financial advisors, Chase de Vere. IPSE members can now access a free initial consultation with one of their expert financial advisors.