Tax Year Planning - actions to think about
Each tax year offers allowances and financial planning opportunities – but you need to act now to make sure that you don’t miss out.
Click below to see the key points to consider or read the Origen Guide to Tax Planning brochure.
Making the most of your ISAs
When it comes to investing, an Individual Savings Account, or ISA, is one of the most tax efficient ways you can save for the future.
If you’re age 18 or over you can invest up to £20,000 each year (known as your annual ISA allowance).
ISAs are free from Income Tax and Capital Gains Tax.
There’s a Junior ISA allowance of £9,000 a year, making an ISA an excellent way to save for children or grandchildren.
What do you need to think about?
- How are your existing ISAs performing?
- Is it worth switching existing investments into ISAs to be more tax efficient?
- Would a stocks and shares ISA be a better option than a cash ISA due to the impact of inflation?
- Have you reviewed your other investments to see if any updates are needed to help meet your financial goals?
Pension Savings
Pension contributions are an excellent tax efficient way to save for your future.
You can contribute up to £40,000 each year (known as your Annual Allowance) and bring forward unused allowances from the previous three years.
From age 55 you can take up to 25% of your pension tax-free
Personal contributions up to your annual earnings receive Income Tax relief until you’re age 75.
What do you need to think about?
- Are you saving enough for your retirement?
- Have you used your Annual Allowance, or unused allowances from previous years?
- Do you know how your pension savings are performing?
- Are you close to your Lifetime Allowance? Your Origen adviser can talk to you about other investment options if you’re close to, or have exceeded, the limit.
Reduce your Inheritance Tax bill
Inheritance Tax, or IHT, is the tax paid on the value of your estate when you die. There’s plenty you can do during the tax year to ensure more of your wealth is passed on in future.
The £325,000 nil rate band and £175,000 residence nil rate band are now frozen until 2028.
If your estate is less than £325,000 there is no IHT to pay.
Making lifetime gifts now will reduce the value of your estate after seven years.
You can also gift money using your £3,000 annual IHT exemption. If unused, this can be carried over to the following year.
What do you need to think about?
- Can you make tax efficient lifetime gifts and help with pension contributions or ISA savings for others?
- Do you have any unused gift allowance from the last tax year that you could use?
- Can assets be transferred to your spouse/civil partner or into a trust to help protect your estate from IHT?
- Have you considered other financial planning actions to help reduce your IHT bill? Your Origen adviser can suggest tax efficient options depending on your circumstances.
Take advantage of tax allowances
With inflation on the rise and tax bands frozen or lowered in some cases, there are ways you can reduce your tax bill and help your household income go further.
The tax free personal income allowance is frozen at £12,570, while the 45% additional rate tax threshold is lowered to £125,140 from April 2023*.
Capital Gains Tax allowance is lowered to £6,000 and the Dividend Allowance is halved to £1,000, from April 2023.
What do you need to think about?
- Have you considered using your pension Annual Allowance to reduce your taxable income?
- With Capital Gains Tax and Dividend Tax allowances halved from April 2023 what actions are needed to make the most of these allowances?
- Is it financially beneficial to pass some of your income generating assets to a spouse/civil partner in a lower tax band?
- Our advisers can also help you to review how you use your investments to provide additional income or to meet your needs in retirement. A careful strategy can help to reduce the tax you pay, which may include reviewing asset ownership, to help household income go further.
*Personal tax bands in Scotland are different. Please see our Guide to Tax Year Planning for details.
Origen Guide to Tax Year Planning
Read our guide on the key financial planning actions you should consider to maximise your tax year allowances.
Let’s find ways to maximise your tax allowances
We can help you make the most of your tax allowances and check that your financial plans are on track for a secure future. Your Origen adviser can suggest any actions you need to put in place.
Please contact your Origen adviser, or call our Client Services Team on 0344 209 3925* or email clientservices@origenfs.co.uk to arrange a call at a time to suit you.
*Calls are charged at your phone company’s basic rate. All calls are recorded for business purposes.
This information is for UK residents and should not to be taken as financial advice. Before you take any action based upon this information, you should seek advice regarding suitability and tax consequences.
CA8719 Exp: 11/2023