With the new tax year round the corner, it’s a good time to see if there are some opportunities to maximise your tax efficiency. We’ve prepared this simple checklist to see if there are opportunities you could qualify for.
Yes? You have an annual Capital Gains allowance of £12,300, and you can’t carry it forward to future years.
It may be worth carefully selecting investments to sell and crystalise some of the gains to use your Capital Gains allowance. To make this planning effective, you can’t repurchase for 30 days. But, if you’re married – your spouse can.
If you have investment gains above the annual allowance, consider transferring assets to your spouse before they are sold to use their allowance.
No? ISAs are tax-efficient investments free of personal income tax or capital gains tax.
The annual ISA allowance for adults is £20,000 per person. If you don’t use it, you’ll lose it. If you haven’t used your ISA allowance, consider doing so. You don’t need to invest in stocks and shares if you don’t want to, your money can be held in a Cash ISA. You can also transfer it from a cash ISA to a stocks and shares ISA later.
If you hold investments outside an ISA and haven’t used your ISA allowance, consider transferring some of your investments to your ISA. Just make sure you have considered the Capital Gains implications. There is also an annual Junior ISA allowance of £9,000 per child.
No? Pensions are a tax-efficient way of preparing for your future.
There are pros and cons of making contributions personally versus your business, and you should get advice on what’s best for your circumstances.
If you hold savings or investments outside of a pension, you may be able to transfer these assets into your pension. Remember, you can’t access money invested in your pension until you reach the minimum pension age. This is currently 55 and rising to 57 from 2028.
Yes? If your total income is likely to breach the £50,000, £100,000 or £150,000 tax thresholds, then personal pension contributions or charitable donations may allow you to manage your tax position and benefit from tax relief at lower rates.
Yes? The Child Benefit entitlement is progressively lost between £50,000 and £60,000. You may be able to retain or recoup this entitlement by making pension contributions to bring your adjusted income back to £50,000.
No? There is a £3,000 annual gift exemption. Subject to conditions, any unused part of this exemption can be carried forward one tax year.
Multiple gifts of £250 per person can be made each year and are exempt from Inheritance Tax.
There is still time to make the most of your allowances for this tax year. If we can help at all, please let us know – our financial planners and tax advisers will be able to advise on your personal situation and goals.
Book a call at a time that suits you