The 5th April might seem a little way off yet, but the end of the tax year always seems to arrive faster than we think! For financial planning, the end of the tax year is important for a variety of reasons and so, before we hit the deadline, put some thought into the following five tips and maximise your saving opportunities before they disappear for good!
1- ISA ContributionsThe annual ‘big one’. The amount you can invest into an Individual Savings Account (ISA) resets at the tax year end and there is no way of carrying over your allowance to next year. If you fail to use it then that’s it: it has gone. This tax year, following the change announced in 2014’s budget, the ISA limit was increased to £15,000, up from £11,520 in 2013/2014, which means that many of us may still have some room to save away some extra pounds from the tax man. There’s also no longer a limit on how much you can put into a cash ISA, so your entire £15,000 could be invested in that way, if you so wish.
2 – Pension Contributions and Flexible Pension Preparation: Pension contributions are another factor to check annually. Contributing to your pension is often a good way to manage your tax liabilities, although clearly it should be done with your full financial plan in mind. You’ll need to bear in mind the pension lifetime allowance however, which is now £1.25 million. Anything above that within your pension can currently be taxed, thus potentially altering your tax planning, so it’s especially worth checking the size of your pension pot if you’re considering extra contributions. Whilst you’re looking at your pension, consider preparing for its new flexibility: the new rules announced during the 2014 Budget come into force at the turn of the tax year.
3 – Keep an eye on the Budget: The 2015 Budget Statement will be delivered by George Osborne on Wednesday 18th March. Although changes that affect this current tax year are fairly unlikely, they are not completely unknown and ‘instant’ changes, such as the change to Stamp Duty announced during December 2014’s Autumn Statement, are a regular occurrence. This is also the Budget prior to May’s UK General Election, so expect some fairly major announcements designed to appeal to voters that could come into force at the start of the 2015/2016 tax year.
4 – Capital Gains Tax Allowance: A perennially forgotten ‘gift’ from the taxman, the Capital Gains Tax Allowance is £11,000 for the current tax year. This means that you pay no tax on Capital Gains up to that amount. It is also an individual allowance, meaning that a couple can shelter up to £22,000 and genuine gifts from a spouse or civil partner do not count towards the allowance. There are various other exemptions and careful planning can again really help your tax position.
5 – Children’s Savings: Don’t forget that many of the above also apply to your children! Junior ISAs for this tax year are £4,000; their Capital Gains Tax Allowance is set at the same rate as adults and they can even make pension contributions. Who knows, depending on their age, they might even be able to tell you something about March’s Budget!