Want to build some financial security into your life? There's nothing better than tax-advantaged saving. With pension saving and long-term saving, you can get annual tax relief of up to 30% on the amount you save. At the same time, you accumulate a nice little nest egg. And, if you start a long-term saving plan when or soon after you start working, the amount set aside can be used to pay the mortgage protection cover on the loan for your home.
Get up to 30% tax relief each year on the amount saved
Tax-advantaged saving: maximise your tax relief entitlement
For your pension savings, you yourself decide in 2019 what maximum amount you can report to the taxman. You can opt for a maximum of 980 euros, giving your tax relief of 30%, or up to 294 euros. If you go for the higher cap of 1,260 euros, you can claim a tax credit of 25% or up to 315 euros.
The maximum amount qualifying for tax relief on long-term saving plans is dependent on your earned income. The annual figure is 6% of your net taxable earned income plus 176.40 euros euros, which is different from your net pay. Calculate your net taxable earned income with the KBC Brussels Tax Planner. You'll also find the figure on last year's tax assessment notice under 'Gezamenlijk belastbaar beroepsinkomen’ (joint taxable earned income).
Someone with net taxable earned income of 24.000 euros per year can save 134,10 euros per month (1.609,20 in that year). There is an absolute maximum of 2,350 euros per year.
Save for your home …
Long-term saving makes things easier for you later when buying or building your own home. You can use the amount you've set aside in at tax-efficient manner to pay the premium of your loan balance insurance (i.e. mortgage cover life insurance).
On average, you need to save 5 000 euros to insure a home loan of 200 000 euros. By setting aside 50 euros a month, you'll have saved that sum after nine years. Saving 100 euros a month will enable you to reach that figure after less than five years.
During the period you pay off you home loan, there is also the possibility to benefit from tax breaks if you continue saving under the pension saving tax scheme. If you've already set some money aside in a pension saving plan, you can use it to pay for your loan balance insurance (i.e. mortgage cover life insurance).
Should you decide to take out a home loan at another bank, you can still use the amount you've saved at KBC Brussels to pay for your loan balance insurance. And if you want, you can take out additional mortgage cover life insurance at the other bank.
Save for your other projects later in life
Whilst you're paying off your home loan, the tax benefit you get from long-term saving will reduce or disappear. Once you pay off your home loan, you will again qualify for tax relief on the amounts put aside under your long-term saving plan. You'll get back 30% of the amounts saved, even after retiring, as long as you still pay tax then. This is a major benefit because pension saving stops in the year you turn 64. You can use the accrued savings for any purpose.
Double your pension pot
“'What? My pension? I've only just started working. That's miles away.' If that's what you think, you're not the only one. But let us give you food for thought. The longer you put off, the less capital you'll have when you do retire. The earlier you start, the bigger your tax-advantaged savings will be.
Start cautiously, build up at your own pace
Of course, setting aside money is not always easy when you've just started working. That's why you can start a pension savings scheme with just 10 euros per month and a long-term saving plan with 25 euros a month. You can combine the two starting at 35 euros per month.
If you want to increase your rate of saving after a while, you can do so at any time.
Tax-advantaged saving is a win-win-win situation
Because of how tax relief works, when you combine pension and long-term saving, you cash in three times:
- You have a tidy little pension to look forward to
- You get tax back on your savings, which build into a sum that you later use to finance mortgage protection cover when you take out a home loan, even if you arrange your mortgage with another bank
- Every year your savings qualify for tax relief, you pay less tax. And, if you still pay tax after retiring, that continues long afterwards under a long-term saving plan
We're ready to help you
When should I best raise the amount I save? When is it advisable to tone down my savings plans? And for how long should I do so? These are not easy choices, which is why we're on hand to help. We put together tax-advantaged savings plans that are tailored as closely as possible to your own personal situation. Call us. We’re ready and eager to help you.