As we close off towards the end of the financial year and the new one begins, why not get ahead of the game and look at your financial planning with a head start?
As we move towards April 6, there are some valuable annual allowances that renew and that offer great opportunities to help you to become a more tax-efficient version of you.
So, what am I talking about here?
- Did you know that earning over £50,000pa will generate a loss of your Child Benefit allowance? There are simple financial planning tools that we can implement here, to help to preserve this level of benefit and as a consequence the allowance will not become taxable or lost.
- Your annual ISA allowance for 2023/2024 tax year remains the same as the current tax year and sits at £20,000. This can be held in cash, stocks and shares, or a combination of the two. Your ISA investment is a tax-efficient wrapper where the returns are free from capital gains and income tax, therefore making the longer-term investment strategy favourable in most cases, when we are thinking about planning towards our retirement. An ISA will allow us to look to reduce our Income Tax status at that time, as we can supplement our pension, or other taxable income, with this tax-efficient amount.
- The annual pension allowance has increased for the new tax year (2023/2024) to the lower of £60,000 or 100% of your UK relevant earnings, whichever is smaller. With our help, we ascertain what your relevant earnings are and the maximum allowance that is available to you, making your contributions extremely tax efficient. This means that we are able to make this money more valuable to you, more quickly. For example, an investment of £60,000 to your pension would immediately cost you only £48,000 – the reason being is that we would reclaim £12,000 of basic rate tax on your behalf and add this to the invested amount. Depending on your income tax bracket, should you be in the higher or additional rate category, you would be eligible for further tax relief and this would be reclaimed annually via a self-assessment. There are no other tax wrappers that work like this, making pensions one of the most tax-efficient form of investing.
A non-earning person, or child, is also eligible for a pension and the tax relief benefit. Their annual allowance is £3,600 which would actually only cost £2,880 to the investor. Food for thought when looking at becoming more tax efficient within a household.
Here at Avail Financial Planning we offer a unique approach to looking at your overall financial plan. We don’t often talk about the money, but the opportunities that making a plan can bring. We use creative software that helps us to identify any gaps and opportunities and lets us visualise the recommendations that are being formed.
We are a holistic financial planning firm covering the surrounding areas of Woburn and Milton Keynes, offering a personalised approach to all. We offer a no obligation initial consultation, please do get in touch to see how we can help further.
Our advice areas specialise in:
- Pension reviews and retirement planning
- Investment reviews and investment planning
- Later life planning
- Protecting your business and families
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.
Cash ISAs are not available through St.James’s Place.
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 groups wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The title ‘Partner Practice’ is a marketing term used to describe St. James’s Place representatives.
Find out more about Avail Financial Planning on 01525 654771 or 07508 810753 or click here.
SJP Approved 16/03/2023
