End of tax year planning needs thinking through to ensure you maximise the available tax breaks that can boost your financial planning and retirement planning.
1- ISA Contributions
Don’t forget to maximise your Individual Savings Account (ISA) contributions. These got more generous during the past year so make sure you invest the full £15,000 if you are able. The amount you can invest into an ISA will be lost if you fail to use it. This tax year, following the change announced in 2014’s budget, the ISA limit was increased to £15,000, up from £11,520 in 2013/2014, which means that you may still have some of your allowance available. Now there is no longer a limit on how much you can put into cash or stocks and shares in and ISA.
2 – Pension Contributions and Flexible Pension Preparation
If your financial plan is focused on retirement planning then you will want to ensure that you use pension contributions wisely. Contributing to your pension is often a good way to manage your tax liabilities as your personal contributions will benefit from income tax relief. There are a couple of things you need to bear in mind however. Firstly, the pension lifetime allowance, which is now £1.25 million and secondly the annual allowance, a maximum of £40,000. If you want to and are able to contrite more then carry forward of pension contributions might be worth consideration. Don’t forget, the well publicised changes to pension flexibility come into force from April 2015.
3 – Pre election budget.
As this is the Budget prior to May’s UK General Election, so expect some fairly major announcements designed to appeal to voters that could come into force at the start of the 2015/2016 tax year.
4. – Capital Gains Tax Allowance
Don’t forget this opportunity to obtain another ‘tax free’ return. The Capital Gains Tax Allowance is £11,000 for the current tax year. This means that you pay no tax on Capital Gains up to that amount. It is also an individual allowance, meaning that a couple can get up to £22,000 and genuine gifts between spouses or civil partners do not count towards the allowance.
5 – Children’s Savings
Don’t forget that many of the above also apply to children and grandchildren. Junior ISAs for this tax year are £4,000. Their Capital Gains Tax Allowance is set at the same rate as adults and you can even make pension contributions on their behalf that receive tax relief even though they might not pay tax!.