With the New Year behind us, tax year-end planning should now be on your radar. Last month we highlighted several financial planning opportunities for ISAs, pensions and investments and you can find out more on our tax planning webpage.
The 2021/22 tax year ends on Tuesday 5 April and the sooner you start planning the better. If we need to provide advice on your plans and put them in place, please contact us as soon as possible.
Here are some of the key areas where we can help you:
Pensions – Making pension contributions is one of the few ways that you can receive full Income Tax relief and reduce your taxable income. As pension contributions are an allowable expense, making them could help you to avoid the High Income Child Benefit tax charge or to retain or regain your full personal allowance. The end of the tax year is a good time to assess how much you can contribute into a pension as you should have a good idea of your total taxable income for the year.
ISAs – An Individual Savings Account (ISA) is free from Income Tax and Capital Gains Tax, allowing your savings to provide tax-free income and growth. You have an allowance of £20,000, whilst children under age 18 have an allowance of £9,000 in this tax year. If you and your family members have already used up their allowances for this tax year, we can help you get the tax year 2022/23 off to a good start by reviewing your ISA investments.
Over time, you may have invested in several ISAs – but have you reviewed how they are performing and whether they match the level of investment risk you are willing to take?
Inheritance Tax – First on the list to consider is using your annual exemptions, such as the £3,000 annual gifts exemption. If you haven’t used last year’s annual exemption then this can be used this year – a total of £6,000 can be gifted without any Inheritance Tax implications. With the Inheritance Tax nil rate bands frozen until April 2026, it is all the more important to make use of these exemptions.
Capital Gains Tax – The annual exemption allows you to realise capital gains of up to £12,300 each tax year free from Capital Gains Tax (CGT). The potential for this exemption being reduced or the CGT rates being raised from 10% and 20% to Income Tax levels did not materialise in the review by the Office of Tax Simplification. With increasing pressures on household spending due to rising inflation and the additional National Insurance contributions in April, realising capital gains before the end of the tax year may help to provide the additional funding required.
These are only some of the areas where our advisers can help your personal finances and tax year end planning. Please contact your Origen adviser or our Client Services Team on 0344 209 3925 as soon as possible, so we can take the necessary action before the end of the tax year. Calls are charged at your phone company’s basic rate. All calls are recorded for business purposes.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The value of your investment can go down as well as up and you may not get back the full amount you invested.
CA7560 Exp 02/2023