Now we are into Q4 of 2023, have you considered how best to maximise the allowances that are available to you? We usually find that the latter part of the calendar year presents an opportunity to get your financial ducks in a row and ready for the start of a new year.
It’s always a good idea to take advantage of your annual tax reliefs and allowances whenever you can and thinking about this now gives us plenty of time ahead of the end of the financial year (April 5, 2024). Not only does it mean that you don’t pay more tax than necessary, it also helps to improve your investment outcomes and makes it easier to achieve your financial goals.
Here is a short summary of some of the available allowances within the current tax-year (2023/2024):
- Capital Gains Tax (CGT) allowance is £6,000. This means that when you sell investments, you can enjoy gains up to £6,000 before being subject to CGT.
- Dividend Allowance is £1,000 and from April 2024/2025 this will be halved to £500.
- ISA Allowance is £20,000 or £9,000 for a Junior ISA.
- Pension Allowance is £60,000 or 100% of your UK relevant earnings, whichever is the less of the two.
- Personal Savings Allowance, which is currently £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers allowing this to be earned in interest before needing to worry about the tax.
- Inheritance Tax (IHT) gifting – each year, you can give away £3,000 tax free and free of IHT.
Most allowances work on an annual basis and where they are not used, they are lost. There are, however, two exceptions: pensions and the IHT gifting allowance. Carry-forward rules enable you to use any unused pension allowances from the past three years, while any unused IHT gifting allowance from the previous year can be used. This means a couple gifting for the first time could legally gift £12,000 tax free to their family and, in certain circumstances, up to £180,000 could be invested directly into your pension.
We often see pension carry-forward being used by company directors as their profits begin to increase and their tax position and future plans begin to become a greater priority. Did you know that company profits can be extracted, by way of a direct pension contribution, meaning that there is no corporation or personal income tax to pay on the contributions that are being made to the pension? This gives a direct saving of 25% in the current financial year, in tax relief immediately.
There are also additional benefits of making pension contributions that can effectively reduce your annual earnings and preserve benefits such as Child Benefit allowance, and the preservation of the 30 free hours of childcare support, subject to certain conditions and for those that earn less than £100,000 each year. If this is you, please do get in touch to understand how we can help to adjust your overall income for the assessment of this, whilst retaining the 30 free hours and preserving the funds for your future, rather than paying them away in tax.
We offer a no-obligation financial or pension review, to help you get to grips with your current and future financial position. One client, when questioned about our service*, said this:
“Charlotte took the time to look at all my pensions to ensure that I am maximising my pension offering. She is also always on hand to offer advice and support, whether this is for investments or financial planning, she really does go above and beyond!”
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Avail Financial Planning is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/products.
The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
*The testimonial included above has been gathered and displayed directly through VouchedFor and has not been verified by SJP.
Find out more about Avail Financial Planning on 01525 654771 or 07508 810753 or visit