3 things to do before the new tax year
Surprising though it may seem (given that January felt like the longest month ever), the new tax year is fast creeping up on us. To ensure you’re making the most of your personal allowances for this tax year, there are some key things to consider before 5th April.
Here, we’ve rounded up our top three items for your end-of-year financial to-do list:
- Take full advantage of your pension annual allowance
The pension annual allowance is the maximum amount you can contribute to your pension in a year while still benefitting from tax relief. This is currently capped at £40,000. If you haven’t used your full allowance in recent years, the good news is you can carry it over. In other words, you can contribute this year’s full pension allowance, plus any unused allowance from the last three years. Many people assume the pension allowance can’t be carried over, so this is a great tip for maximising your pension savings.
- Use your annual ISA allowance
Unlike the pension annual allowance, the maximum annual ISA allowance (currently £20,000) can’t be carried over into future years. So if you don’t fully use your £20,000 allowance in this tax year, you can’t make up for it by saving more next year. It’s a case of use it or lose it. That said, if you’re nearing the top of your allowance, you do have the option of gifting money to a non-working spouse or civil partner to put towards their allowance.
- Use your Capital Gains Tax (CGT) allowance strategically
If you’re planning to sell assets and want to minimise your CGT burden, it’s really important you make the most of your CGT allowance (£12,300 at present). An accountant or tax adviser will help you decide the most strategic way to do this. For example, you might be able to use some of your spouse or civil partner’s allowance.
The key message with all of these tips is to take action sooner rather than later, especially as the CGT allowance and tax relief on pensions might change in the next tax year.
But what if you don’t have an accountant or tax adviser to guide you? Jupp Castle’s award-winning team can help you figure all this out and prepare for the new tax year with confidence. Book a chat with us.
(Image by Monic Heinen Diakité from Pixabay)