Steve Webb has made a financial difference throughout his political career and has since also taken up writing articles and providing insight to people all over the country in regards to pension and tax breaks and advantages. His claim to fame and his area of expertise has always been the pension system and the pension sector. His work was dedicated entirely to improving this system for all tax payers and citizens with many arguing that he succeeded immensely.
His first piece of advice is to avoid any unnecessary gaps in their NI record as one year short can be 1/35 of your pension, a costly error. In order to help you avoid these gaps, there are several tax credits that have been set up to help you and those you know and love. Some of these are so complex that they deter people from applying which makes them miss great opportunities. In order to help people better understand these credits,Webb breaks them down as follows:
If you have grand kids and fall under the state pension age, you have met the eligibility criteria for this credit. This credit was created to help those who stop their work after the birth of a grandchild in order to provide child care for their son or daughter’s return to work. This helps grandparents keep their pension in a simple way.
Military spouse credit
This credit is relatively specialized and is designed for civil partners and military spouses. This comes after the announcement that women cannot claim state pension based on husband’s NI contributions. This evidently created issues for military wives who have been stationed outside the UK.
If you work in care for 35 hours a week you can claim a carers allowance which gives automatic credits for state pension. The intention is to acknowledge people administering care full time which prevents them from earning to their fullest potential.
High income child benefit tax charge
If one partner earns more than £50,000 a year, there are taxes that are almost unimaginable and to balance this, there are credits and ways of avoiding the cash paid but still protecting the pension record. Don’t forego any credits simply to avoid the taxes and tax implications you will face.
One final tax credit that exists but has an extremely low update rate is the marriage allowance. This applies to those married couples and civil partners where one of the partners may not be a tax payer. The non-tax payer can actually consent and provide up to 10% of their personal allowance to the higher earning partner which equates to £200 per year with claims being able to be backdated as far as 2015.
As you can see, there are many ways to make your pension and tax situation a little bit more favourable. The government offers an array of credits and breaks but some do require more work and research than others in order to understand and meet the eligibility requirements.