Whilst the cold weather and long nights might make the beginning of April seem a long way off, the final few months of the financial year always seem to fly by. It’s therefore a good idea to start thinking about the most important things to do before 5th April arrives and the tax year ends. To get you started, have a look through our top four tips for what to do to ensure you are making the most of your investment opportunities whilst you can.
1. Use your ISA allowance – you can invest a maximum of £15,240 per year in your ISA. That amount resets at the start of each tax year, and there is no way of carrying over any allowance that you haven’t used. Simply put, if you don’t use it, you’ll lose it. Remember, if you have both a cash ISA and a stocks and shares ISA, the £15,240 is the total of the combined accounts. However, you can now choose how you divide the allowance between the two accounts, something you couldn’t do until a couple of years ago.
2. Pension Contributions and Flexible Pension Preparation – it’s worth checking your pension contributions every year, especially towards the end of the tax year. Pension contributions can often be a sensible way to look after your tax liabilities, but don’t forget you should always do this whilst keeping in mind your full financial plan. You should also be mindful of the lifetime pension allowance, currently £1.25 million but set to be reduced to £1 million from April 2016. Any pensions totalling more than that amount can be subject to further tax, which may impact on your financial planning overall. Make sure you check the current size of your pension if you’re considering making additional payments, as you may inadvertently push yourself into a taxable amount if you’re not careful.
3. Capital Gains Tax Allowance – a tax break seemingly destined to be overlooked by many every tax year, the Capital Gains Tax Allowance stands at £11,100 for the 2015/16 financial period. What that means is that all profits from investments, or the sale of property up to that amount, remain tax free. Don’t forget that this figure applies to each individual, so a couple can enjoy up to £22,200 joint Capital Gains Tax Allowance. Moreover, a legitimate gift from a spouse or partner does not count towards this total.
4. Savings for your children – it’s remarkably easy to overlook the fact that your children can benefit from virtually all of the above. The allowance for Junior ISAs this year is £4,080, so make use of as much of that as you can before it resets. Capital Gains Tax Allowance is the same for children as it is for adults, and it’s also possible to set up pension contributions for them. All worthwhile ways to make the most of your tax allowances before the end of the financial year.
Sources: https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwiY17XVmpDLAhVItRQKHTgwDeMQFggnMAI&url=http%3A%2F%2Fwww.theguardian.com%2Fmoney%2F2015%2Fmar%2F14%2Ffour-things-before-tax-year-ends&usg=AFQjCNF4kErSYkZ6C8ofMQsJsUkA9B0hiQ, http://www.theguardian.com/money/2015/mar/14/four-things-before-tax-year-ends
If this blog has raised any questions why don't we have a quick chat?
MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.