With just over 4 weeks to go until the 5th April, the end of the tax year, it’s the ideal time to update your finances and ensure you are making the most of any unused allowances for 2019/20. We have summarised this year’s allowances, so you can ensure your finances are as tax efficient as possible:
The allowance for ISA investments is £20,000 per tax year. This can be in the form of cash or stocks and shares investments. Ensure that if you have a Flexible ISA, which allows you to replace any funds withdrawn within the same tax year without it counting as part of the annual allowance, is topped up. For further information on ISAs or other investments visit https://www.resolvefs.co.uk/service/investments/.
Just like ordinary ISA’s, there are Junior ISA’s for your children’s savings. This year’s allowance is £4,368. Just like ISA’s these Junior ISA’s can be a mix of cash and shares. They can be opened for children under 18, the child can take control from age of 16, but cannot withdraw from them until they are 18. You give away all access to the funds, though retain control over the investment. Please note that once the child turns 18, these accounts turn into normal ISAs and become the child’s outright.
Capital Gains Tax
The Capital Gains Tax (CGT) allowance is £12,000. After that the CGT rate on investments is 10% for basic rate and 20% for higher rate taxpayers. For proceeds on properties other than your primary residence, the tax rate remains at 18% and 28% respectively.
You are able to gift up to £3,000 annually to be exempt from IHT. Once the current year’s allowance has been used you can carry forward any unused exemption from the previous tax year, enabling a gift of up to £6,000.
Personal Tax allowances
- Personal tax-free allowance: £12500
- Income up to £37500 – Taxed at 20%
- Income between £37501 and £150,000 – Taxed at 40%
- Income over £150,000 – Taxed 45%
Those with annual income of between £100,000 and £125,000 suffer what is an effective tax charge of 60% due to their loss of the tax-free personal allowance. By making additional pension contributions or giving charitable donations you can reclaim the personal allowance by adjusting your effective income. Get in touch today to discuss this further.
The Budget 2020
With the Autumn 2019 Budget cancelled, due to the general election, we look to the Wednesday 11th March, when the next budget with the Government’s proposals for changes to taxation, will be set out by the chancellor.
Get in touch
Resolve FS specialise in pension and investment advice. We want you to feel informed and confident about your financial future. For further information about our services, please visit https://www.resolvefs.co.uk or get in touch with us today on: 01932 943028 or via email: firstname.lastname@example.org
Please note: Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invest. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The FCA does not regulate Inheritance Tax advice.