End of Tax Year-Have you Made the Most of Your Allowances?

End of Tax Year and Your Personal Allowances

One of the first allowances to consider is your tax-free personal allowance, which is currently £11,500 per annum or £45,000 at the higher rate. These rates will rise to £11,850 and £46,350 respectively from April 2018, in line with the pledge to increase the thresholds to £12,500 and £50,000 by 2020. The Marriage Allowance is also increasing by £35 to £1,185 in the 2018/19 tax year. This allows married couples to lower their overall tax bill, if one of them earns less than the Personal Allowance.

End of Tax Year and Your ISA

Actively take steps to make sure you have maximised your ISA allowances. The limit was raised to £20,000 in the 2017/2018 tax year and will remain unchanged in the coming tax year. Any returns are protected from income tax and capital gains tax. You can invest your ISA allowance either in cash, investments or Innovative Finance ISAs, which invest in peer-to-peer lending, or you can put up to £4,000 of your allowance into the Lifetime ISA (LISA). This was launched last year to encourage people aged under 40 to save for a home or their retirement.

Make sure both you and your spouse or partner have used your allowance. Your children are also eligible for an ISA, with the limit for Junior ISAs and Child Trust funds being £4,128 currently and rising in line with inflation to £4,260 in April 2018. This then remains tax-free until their 18th birthday, when it gets converted into an adult ISA. None of these allowances can be carried over to the following year so it is a case of ‘use them or lose them’.

End of Tax Year and Capital Gains Tax Allowance

Capital Gains Tax allowance is one allowance that is often overlooked. The amount for this annual allowance in the current tax year is £11,300, rising to £11,700 in April 2018. As both husband and wife have the allowance, there is scope for transferring assets between you in order to reduce your tax bill.

End of Tax Year and Pension Allowance and Contributions

Have you fully used your annual pension allowance? This is the limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It’s based on your earnings for the year and is capped at £40,000. Make sure you’re making the most of any matching contributions from your employer too. Remember, any contributions you make will reduce your taxable income and have a direct effect on the eventual size of your retirement fund.

End of Tax Year and Inheritance Gifting

At this time of year, you can also consider whether you have used your Inheritance Gifting exemption. You can give away £3,000 of gifts each tax year without them being added to the value of your estate.

If you would like any help on how to make the most of your tax planning, get in touch with our experienced advisors and begin your Tru Wealth Journey today

info@truwealth.co.uk  www.truwealth.co.uk

Tags: capital gains allowance, financial advice, financial planning, financial services, inheritance tax planning, ISA, money advice, pensions, tax