With the help of a financial adviser and some simple financial planning ahead of the tax year-end (5th April 2019) you can make the most of the tax allowances available to you such as your ISA and pension Annual Allowance.
You have a £20,000 ISA allowance each tax year. This is a ‘use it or lose it’ allowance as it cannot be carried forward if it is not fully utilised. This allowance will remain at the same level in the 2019/2020 tax year.
There are 4 types of ISA and you
can put money into one of each kind of ISA each tax year:
- Cash ISAs
- Stocks and Shares ISAs
- Innovative Finance ISAs
- Lifetime ISAs
An ISA such as the Help to Buy
ISA can be beneficial if you are saving to buy your first home. First time
buyers get a 25% bonus from the Government on savings in a Help-to-buy ISA. The
maximum bonus you can receive is £3,000 (if £12,000 has been saved). The
deadline for opening a new Help to buy ISA is 30th November 2019.
With a Junior ISA,a UK child under 18 can currently save
up to £4,260 in one tax year.
A financial adviser will be able
to help you find the type of ISA most suitable for you and your investment
Pension Annual Allowance
UK individuals can ‘normally’
contribute up to £40,000 gross, or up to their annual gross income, per tax
year into a pension scheme. This allowance will remain at the same level in the
2019/2020 tax year.
Funds are tax efficient within a
pension although the Lifetime Allowance (currently £1,030,000) limits the total
amount you can accrue in a pension pot without an additional tax charge.
You can take a look at our previous blog to
find out if you are making enough pension contributions.
The Annual Allowance can be
carried forward, subject to a few rules. If you have been a member of a pension
scheme but have not fully utilised your Annual Allowance for the previous three
tax years, you could be able to carry this forward to make a larger
contribution in the current tax year.
Tapered Annual Allowance – this is when the Annual
Allowance is reduced by £1 for every £2 of ‘adjusted income’ over £150,000. It
can affect you if your income from all sources is over £110,000.
The Inheritance Tax (IHT) nil rate band is currently
frozen at £325,000 until 5th April 2021.
Inheritance tax planning can enable you to utilise the
available exemptions including:
Exemption – up to £3,000 can be given away each tax year and unused amounts can
be carried forward and utilised in the next tax year.
Gifts Exemption – up to £250 can be gifted to as many people as you wish each
out of Income – you can gift regular disposable income if your income often
exceeds your expenditure.
efficient investments can benefit from business property relief and are then
IHT exempt after being owned for two years. These investments can be high risk
and financial advice should be sought.
The annual exemption for the current tax year is £11,700.
This is also an allowance that cannot be carried forward if it is not fully
utilised. Unused losses are carried forward and can be offset against future
2019/2020 tax year –
changes to some of these allowances
After 6th April 2019, the minimum wage for
18-20 year olds will increase from £5.90 to £6.15 per hour. For 21-24 year olds
it will increase from £7.38 to £7.70 and for anyone aged 25+ it will increase
from £7.83 to £8.21 per hour.
This will increase from £11,850 to £12,500 in the
2019/2020 tax year.
This will increase from
£1,030,000 to £1,055,000 in the 2019/2020 tax year.
CGT Annual Exemption
This will increase from £11,700 to £12,000 in the 2019/2020 tax year.
One of our independent financial advisers at Temple
Wealth Management can advise you on how best to plan for the end of the tax
year, as well as how to fully utilise your available allowances in the new tax
To discuss your end of tax year planning needs, contact one of our advisers on 01329 282882 or use our website contact form.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The Financial Conduct Authority does not regulate Tax Advice.