7 Tax Year End Opportunities
The last two years have been stressful and uncertain, however, it’s important to ensure that you’re in control of your finances as we approach the end of the 2021/2022 tax year.
The tax year will, as usual, finish on 5 April and people all over the country will be hurrying to utilise their remaining allowances and benefits. In most cases, once the year ends, the opportunity is gone. There really is no time like the present, as some decisions cannot be made quickly and require lots of research, data, and calculations.
Here are some of the main tax allowances and planning opportunities to bear in mind for individuals:
- Income Tax Personal Allowance: £12,570 – this is how much you can earn before paying tax.
- Capital Gains Tax Allowance: £12,300 – this is how much you can make from growth on assets/investments that you own.
- Individual Savings Account (ISA) Allowance: £20,000 – this is how much you can contribute to your ISA per year (cash and/or stocks and shares). Any income or capital growth earned in an ISA is not subject to taxation.
- Junior ISA Allowance: £9,000 – for under 18’s.
- Pension Allowance: £40,000 – how much you can contribute to a pension in a year. A pension contribution provides income tax relief as well as potentially reducing your taxable income. This can determine which tax bracket you fall into and lead to more (or less) benefits. The end of the tax year is a great time to assess how much you can contribute.
- Personal Savings Allowance: up to £1,000 – how much interest you can earn on savings before paying tax on it; it is affected by your tax bracket.
- Dividend Allowance: £2,000 – how much you can earn from dividends before being subject to taxation.
One tax planning opportunity that is equally as important, however any unused allowance can be carried forward by one year into the next tax year, is gifting for Inheritance Tax Purposes. The allowance is £3,000 per year without it being added to the value of your estate.
As you can see, there is already a lot to think about which could be of great benefit to many people.
With only two months until tax year end, now is the perfect time to seek some professional advice. If you would like further information or assistance on how you may be able to take advantage of these tax reliefs, please contact Ben Judge or Rhyanne Sefton at Birkett Long IFA on 01206 217309.
Birkett Long IFA LLP is authorised and regulated by the Financial Conduct Authority (Authorisation Number 654458)
The money you invest can go down as well as up and you may not get back the original capital invested.