Tax Year end priorities
Are you on the front foot and looking forward to using next year’s tax allowances as soon as the calendar ticks over onto 6th April? (well maybe not this year as it falls on a Sunday). Or are you a last minute planner and still struggling to find time to make use of your allowances for this current year?
As the tax-year end fast approaches what should you think about in respect of your personal finances? Here are a few hints and tips to help out:
- Capital Gains Tax (CGT) allowances, currently £10,900 per annum, cannot be carried forward – so if you have a raft of shares from your employer and too much exposure to a single stock (never a good idea) consider taking gains before 6th April. Married couples can transfer stock between themselves to double up on CGT allowances.
- The 2013 / 14 ISA allowance of £11,520 ends on 6th April so if you have a remaining allowance then be sure to use this. ISAs were given a long-term endorsement in the latest budget and are a great way of generating a tax-free stream of income in retirement. Use it or lose it!
- From 6th April the annual pension allowance falls from £50,000 to £40,000. The use of carry forward can still be used for the previous three tax years, but spreading the cost of funding retirement is certainly worthwhile for those with the means to do so. Contributions are used against current tax year earnings so if you received a bonus this year or a windfall that you didn’t expect, then be sure to consider this form of planning.
For those with children and grandchildren do not forget the Junior ISA allowance which is great way to save for their future and provide a windfall for them at 18 years of age. The allowance will shortly increase to £4,000 per annum per child and over a period of up to 18 years this could really make a significant contribution to education costs or that important deposit for a first house.
One popular additional means to save for children is the use of their own pension allowances. For each child £2,880 can be invested and received tax relief of £720 meaning that actually £3,600 is paid into their pension.