5 necessarily an answer – what your company (and you) save on NICs may be less than the extra corporation tax payable. There are no reliable rules of thumb in making the choice: a calculation based on your circumstances is essential. CGT AND ISAS Gains taxed at the CGT rates suffer less tax than income, especially for higher- and additional-rate taxpayers. ISAs can offer you the opportunity to reduce the CGT you pay, but the maximum subscription is a limiting factor. As ever, the best time to make an ISA investment is at the start of the tax year, so you benefit from the ISA’s tax exemptions throughout the year. For more information on any of the above, or for your own year-beginning tax plan, please talk to us now – there is no need to wait until after 5 April. ✣ The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change. Credit: CC7/Shutterstock.com Ideally your start-of-year planning should begin with an estimate of your gross (pretax) income – not just earnings – over the next 12 months. Benchmarking a living wage The National Living Wage (NLW), the minimum wage paid to workers aged 21 and over, will rise by 6.7% in April to £12.21 per hour equating to around £25,400 a year for a 40-hour working week. his increase reflects rising living costs, and as such is a key reference point for financial planning, whether you’re working or approaching retirement. For example, that £25,400 figure is a useful benchmark for income protection. This insurance pays a monthly income to those unable to work through ill-health. Policies cover a percentage of earnings, but it’s worth checking whether cover still provides sufficient support and reflects current salary and living costs. Likewise, it may be time to review life cover. Many take out this insurance early in careers, often when first getting a mortgage. Policies may last for 25 years, but circumstances can change in the interim, so it’s vital to check whether payouts will still support dependants. THE PENSION GAP The increased NLW is also relevant for retirement planning. At more than double the value of the newly increased full State pension the disparity between the two highlights the need for additional pension savings to ensure a reasonable standard of living in retirement. Many retirees may not have housing costs to pay, but the gap between the State pension and NLW shows this benefit alone will only cover basic expenses. Whether you're still earning, planning for retirement or reviewing financial protection, £25,400 is a number worth remembering. PROTECTION T Credit: Andrey_Popov/Shutterstock.com
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