COVID-19 (Coronavirus) – Gemini Update - January 2021

In line with current Government guidelines, we have taken the decision to reduce the numbers of staff at our Head Office in Sutton Coldfield with the majority of staff returning to working remotely.

However, to reassure you, it is business as usual and we are still available to contact by phone and email as all our systems can be accessed and operated remotely.

Indeed, it is times like these where you may need to seek additional advice from financial services professionals. Both our Wealth Managers and Estate Planning Consultants remain available to assist you and are able to offer guidance on the phone, by email or by video technology.

Please contact us FREE on 0800 255 0123 or email info@gemini-wm.com where we will do our best to assist you.

We would also like to extend our offering to your family, friends or colleagues so please do pass on our details. We are here to help!

Please scroll for more information.

A Short Guide to Reducing Taxes in Retirement

Back to News & Views

Tax planning does not stop at retirement. When you have spent a lifetime working, it’s only natural to want to make the most of your hard-earned money.

There are several options for reducing tax in retirement. By taking a combination of approaches, you may be able to save several thousands in tax over a period of years. While you should never base investment decisions solely on tax-efficiency, a good financial plan will aim to structure your investments (and your income) in the most effective way. This can bring you closer to your own goals and help to preserve a legacy for the next generation.



Your pension is probably the foundation of your retirement plan. At retirement, your pension is treated in the following way for tax purposes:

  •          You can draw a tax-free lump sum. This is normally 25% of the fund value, although it may be calculated differently for certain occupational schemes.
  •          The remaining fund can provide you with an income which is taxed at your marginal rate.
  •          Funds invested within a pension benefit from tax-free growth, interest, and dividends.

You have a great deal of flexibility in how you draw your pension income. Here are some suggestions for making your pension more tax-efficient:

  •          Phase your tax-free lump sum over a number of years rather than drawing it all at once. This keeps more of your money within the tax-efficient pension wrapper for longer. With investment     growth, it’s likely that the total amount of tax-free cash will be higher.
  •          Draw an income from your pension up to the value of the personal tax-free allowance (£12,500 for 2020/2021). This means that you won’t pay any tax on your pension income. This option works best if you have cash and investments that can be used to top up your income.
  • Alternatively it may make more sense to defer drawing on your pension for as long as possible, for example if you have other income that already uses up your allowances. This allows your pension fund to benefit from tax-free growth for longer. Additionally, pension funds are not subject to Inheritance Tax. The funds can be passed on free of tax on death before age 75, or taxed at the beneficiary’s marginal rate after age 75.



ISAs are another important component in retirement planning. Unlike pensions, they do not offer tax relief on contributions, but they are considerably more flexible.

The main features of an ISA are:

  •           You can invest up to £20,000 per year, either in cash, stocks and shares, or a combination of both.
  •           Growth, interest, and dividends are all free of tax.
  •           You can withdraw money without restriction, tax, or penalty. Any money withdrawn can be replaced in the same tax year without using up any of your ISA allowance.
  •           ISAs can be passed between spouses on death, preserving the tax-efficient treatment.

ISAs can be used in the following ways to reduce tax in retirement:

  •           To top up your income, particularly if your pension already exceeds your tax-free allowance.
  •           To give you flexibility to fund larger, one-off expenditure items. High withdrawals from pension or investment accounts can result in significant tax.
  •           To make your portfolio more efficient over time, e.g. by gradually moving your taxable funds into ISAs.


Investment Accounts

Investment accounts are a basic and flexible investment wrapper. They can hold funds, shares, investment trusts and anything else deemed acceptable by the provider.

The tax treatment is as follows:

  •           Interest and dividends are taxable at your marginal rate.
  •           Disposals of assets can incur capital gains tax if your profit (net of charges) exceeds your annual exemption (£12,300 for 2020/2021).

Any of the following options can help to reduce tax:

  •           Gradually phase your taxable investment accounts into ISAs.
  •           Make use of your capital gains exemption each year to avoid large gains rolling up later on.
  •          Structure your investments depending on the type of income they generate. You can receive dividends of up to £2,000 per year without paying tax. It can be beneficial to hold dividend producing assets in a taxable portfolio, while holding interest bearing assets in an ISA.
  •           Allocate more of your investments to a spouse if they have a lower income, as this can use up both personal allowances.
  •           Hold assets jointly before selling to make use of both capital gains exemptions. Transfers between spouses are ignored for CGT purposes and there is no minimum holding period.


Other Investments

Depending on your circumstances, there are a number of other tax-efficient investments that may be suitable for you. For example:

  •           UK investment bonds
  •           Offshore investment bonds
  •           Enterprise Investment Schemes
  •           Venture Capital Trusts
  •           Alternative Investment Market stocks

These investments are not appropriate for everyone, but can form part of a comprehensive tax strategy in the right circumstances.

Structuring Your Income

The most efficient retirement income strategy has the following features:

  •           It is planned well in advance
  •           Allowances and exemptions are used to their fullest extent
  •           Married couples plan jointly to ensure that income and assets are allocated effectively
  •           In terms of capital withdrawals, cash is used first, followed by taxable investments, ISAs and finally pensions.


A financial plan can help you structure your income, reducing your tax in retirement and helping you to achieve your goals.

Please do not hesitate to contact a member of the team to find out more about your retirement options.

The Financial Conduct Authority does not regulate tax advice 


Book your FREE, no obligation discussion today. Schedule Appointment

Sign Up to our mailing list - Receive regular news, tips and financial commentary from the Gemini Team.

Latest News

  • Sustainability is an important measure of a company’s credibility, whether the industry is food production, travel, or fashion. It has become increasingly relevant to the investment process, as companies aim to operate more ethically, and consumer appetite for sustainable investing has risen. [...]

  • Just over a month since the Budget, what does it mean for you? We have highlighted the key points to note, following Chancellor Rishi Sunak's announcement [...]

  • Getting divorced is one of the most stressful life events you can experience. You need to consider living arrangements, splitting of assets, custody of children – and that’s before thinking about the emotional toll it can take. [...]

  • A strong estate plan can help to reduce tax, protect your legacy, and ensure that more of your money passes to your loved ones. The decisions can be difficult, but once in place, your estate plan will make things easier for you and your family later in life. [...]

  • In financial planning, we often have to prompt our clients to think about worst-case scenarios. This is not always a pleasant exercise, as no one likes to think about their own mortality or the loss of a partner. [...]

  • Delivering the Budget in Parliament on 3 March 2021, Chancellor of the Exchequer Rishi Sunak said, ‘This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people. [...]

  • While no one likes to think about death or ill-health, a few simple decisions now can help you keep control of your assets and reduce stress for you and your loved ones later in life. [...]

  • The concept of buying low and selling high is well known. Achieving this consistently will inevitably result in profit. The ‘secret’ is knowing when to buy and sell. An investor may believe that a particular company is likely to do well following an event in the news. The consensus is that the share price will increase and that the investment will perform well if bought at the right time. [...]

  • Tax planning does not stop at retirement. When you have spent a lifetime working, it’s only natural to want to make the most of your hard-earned money. [...]

  • Financial planning can be complex, and the best solution for one person often doesn’t work as well for someone else. It’s easy to become focused on investment returns, when really, this forms only part of the picture. [...]

  • The UK has been out of the EU since 31st January 2020, however it took almost a further year to reach agreement over a deal. While this has been a source of relief, there are some areas still to be finalised, and no guarantee that the terms agreed now will continue indefinitely. [...]

  • After the (more or less) steady market growth over the past five years, the recent volatility has come as a shock to many investors. The economy is cyclical, and downturns are a feature of investing. We have to assume they will occur, just as we understand that they are usually followed by a recovery, during which any losses are more than recouped. It’s impossible to predict the timings, but over a lifetime of investing, it’s reasonable to assume that short periods of volatility will be ironed out. [...]

Gemini Wealth Management Ltd is Authorised and regulated by The Financial Conduct Authority Registered in England & Wales No. 5919877 Registered Office: Gemini House, 71 Park Road, Sutton Coldfield, West Midlands B73 6BT The Financial Conduct Authority does not regulate tax and trust advice, will writing and some forms of buy to let mortgages. The guidance and/or advice contained in this website is subject to regulatory regime and is therefore restricted to those based in the UK.

Website by Mellow Marsh Software
© Gemini Wealth Management Ltd
Privacy Notice | Cookie Policy