Preparing For The End Of the Tax Year – Dos, Don’ts and Advice
With all of the lingering uncertainty of 2020, it’s unsurprising that many people are putting off taking action towards the end of the tax year. This can be detrimental, however, as it can prevent you from continuing to take steps towards your financial objectives and long-term goals. It’s better to act sooner, rather than later, and make sure that you are making your money work harder rather than being caught in the common pitfalls.
What should and shouldn’t you do before the 5th April to make sure you’re prepared?
Review your pension
Most people can still benefit from tax reliefs on pension contributions worth up to £40,000 per tax year (Or 100% of earnings if lower).
Though this annual allowance can be reduced for high earners, the threshold for this has risen, so this allowance will only go down for those with an income over £240,000 (rather than the original £150,000).
Those under an income of £240,000 still have a £40,000 allowance!
Consider one of the simpler options
Annual ISA allowances are still extremely popular as they are a simple and more flexible way of sheltering money from income tax and Capital Gains Tax (CGT).
There are a range of ISAs available, but the important thing to note is that you cannot carry forward allowances into the next tax year.
Speak to a financial adviser if you’re unsure about what allowances you can benefit from.
Trip up over CGT
The CGT exempt amount for individuals has increased from £12,000 to £12,300, but what does this mean?
Effectively utilising your CGT exemption is a great way to transfer assets into pensions to provide a buffer from any future tax liability on income/gains.
Wait too long
Whether it’s ensuring that your pension is being reviewed regularly (as mentioned above) or your financial affairs generally, it’s better to do it sooner rather than later.
Certain tax breaks are likelier to change due to government scrutiny, which means that changes are inevitable, and it can be difficult to keep up-to-date.
Therefore, speaking to a financial adviser about what you can maximise in terms of allowances and reliefs is essential in ensuring you’ve not missed anything vital too late.
As we come closer to reaching the end of the tax year, the main priority for us is that all of our clients feel confident and assured that they are in total control.
Contact us to find out how we can help you plan for the end of the tax year.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.