The new tax year will start on the 6^th of April 2020 – but have you maximised your tax-efficient allowances for the current year? To get you started, we have created this list with a few tips and reminders. If you think you could benefit from professional, financial advice please get in contact with one of our financial advisers.

ISA Allowance

This is one of the most tax-efficient investment options in the UK. Have you maximised your current allowance of £20,000? If not, can you do so before the 5th of April? A total of £20,000 can be invested across different types of ISAs, for example, a cash ISA and a Stocks and Shares ISA but you must not exceed the £20,000 limit. If you haven’t already reached this allowance it is worth making further deposits before it’s lost at the end of the tax year.

Three words - Capital Gains Tax (CGT)

If you have sold any assets this year worth more than £6,000, you may have paid Capital Gains Tax. Assets include property that is not your main residence, any personal possessions worth more than £6,000 (apart from your car) and shares that are not in an ISA. The amount of CGT paid will depend on the asset, however, you are entitled to an annual exempt amount and for the tax year 19/20 that’s £12,000. If you are considering selling any of your assets, now might be the time to do so if you have not already made use of the allowance. You will not be able to carry it forward.

For more information on Capital Gains Tax including the assets that are exempt please visit https://www.gov.uk/capital-gains-tax/what-you-pay-it-on

Have you considered…

Plump up the pension pot

There is an annual allowance of £40,000 that can be paid into your pension between you and your employer each tax year that’s tax-free. If you can afford to, you could consider saving a bit more to help prepare for retirement and to make the most of the tax relief. Talk to your employer if you are considering increasing your contributions as they may be able to assist you.

Fear not, if you do not manage to make the most of your pension allowance this tax year, it can be carried forward up to three years.

 The Junior ISA

The junior ISA allowance for the year is £4,368. Anyone can pay money into a Junior ISA but it needs to be opened and managed by a parent or legal guardian on behalf of a child or individual under 18. If you are saving for your children or grandchildren’s future, ensure that you have maximised the tax-free saving amount as you will not be able to carry the allowance forward. If you are interested in setting up a Junior ISA for someone or simply finding out more, visit https://www.moneyadviceservice.org.uk/en/articles/junior-isas

Inheritance Tax Planning

Your estate may be liable for inheritance tax (IHT) if the total value is more than £325,000 – this includes your property, savings and material assets. You will be taxed at 40% for anything above the £325,000 threshold, there are ways of reducing your IHT liability including gifting. However, you need to be careful. You can gift up to £3,000 each tax year that will not be liable but gifts that exceed this amount can be taken into account if you die within seven years of the date of the gift.

With careful and regular planning, it is possible to reduce or even remove your IHT liability altogether. There are several misconceptions to watch out for, so it is important to obtain professional advice that is specifically relevant to you. If you would like professional help with managing IHT please get in contact for your free consultation with no obligation.

Family Home Allowance

It was announced in the 2015 Budget that the Government will add a ‘family home allowance’, eventually worth £175,000 per person to the existing £325,000 tax-free allowance from 6th April 2017.

This will be worth:

• £100,000 in 2017-18

• £125,000 in 2018-19

• £150,000 in 2019-20

• £175,000 in 2020-21

This will allow individuals to pass on assets worth up to £500,000, including a family home, without paying any IHT at all. For married couples and civil partners, the total will, therefore, be £1 million. This additional allowance will be gradually withdrawn for estates worth more than £2 million.

The end of the current tax year is fast approaching, if you would like to discuss your options or need advice with making the most of your allowances please contact us. You can talk to one of our highly qualified financial advisers, with no obligation about your financial plans.