Each year, tax year end provides an opportunity to ‘use it or lose it’. The purpose of Tax Year End is to give one greater opportunity to help secure a stable financial future and pay less tax on any inheritance left behind.
FUTUREPROOFING DURING VOLATILE TIMES
Market shocks aren’t a thing of the past, from Coronavirus to Brexit, there are numerous challenges to investors now; and any number of factors that cannot be forecast to come in future years.
Although these factors can’t be controlled, volatility should not be allowed to prevent planning and succeeding in building our own financial futures. The more one focusses on the manageable aspects, the better the chance of achieving the financial objective.
Some of the things that we can control are;
- How and where we invest our money
- How much tax we pay
- The size of our retirement fund
- How much of our estate passes free of Inheritance Tax (IHT).
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Note: Financial planning should be a year-round activity and not one that we focus on only at tax-year end. |
ISAS
ISAs are a quick and easy way to save, they are easy to use and are readily accessible. Recent increases to allowances have been welcomed.
However, low interest rates have meant that Cash ISAs are failing to keep pace with inflation. In order to maximise ISA allowances, investors would need to invest for the long-term principally in assets offering appealing levels of income and capital growth.
Investors who have not yet used their ISA allowance, or those with accumulated ISA savings, need to carefully consider their options to ensure that they are maximising this valuable opportunity to generate tax-efficient capital and income for the future.
PENSIONS
The UK Government rewards pension savers by providing tax relief on their contributions.
- For every 80p that you contribute to a pension, the Government will add 20p in tax relief.
- High-rate earners can claim additional tax relief through their annual tax return. The benefit in doing this is that £1 in pension savings can cost just 60p.
Pension savings can also be easily left as part of a tax-free inheritance.
Anyone who wishes to make retirement plans a reality should consider fully utilising their annual allowance for the current tax year in order to make the most of tax relief offered. Unused allowances are able to be carried forward from the three previous tax years.
INHERITANCE TAX (IHT)
The annual gifting allowance provides investors with the opportunity to remove assets from their estate immediately. Taking steps to reduce your taxable estate by topping up a child’s pension or Junior ISA (JISA) could go a long way to providing them with an invaluable head start in life.
To read our full guidance on Tax Year End, click here
Tax Year End is just one element of the reliefs and allowances which can help to create long-term security for ourselves and our family. To find out more about what is available to you, or if you are interested in receiving financial advice from one of our UK based Financial Advisers, get in touch today.
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