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Tax-Year End Allowances

26th January 2023

Using your 2022/23 annual allowances and tax reliefs before tax-year end (April 5th) is one of the most sensible steps you can take to make the most of your investments.

There are four main personal allowances you should be aware of:

ISA allowance

  • The ISA tax-free allowance for 2022/23 is £20,000.  There is no Income Tax or Capital Gains Tax on any interest you earn, so it makes sense to top this up should you have available funds.
  • Junior ISAs allow children to save up to £9,000 tax-free.  We recommend ‘The Children’s ISA’.  Please follow this link if you wish to start your child’s/grandchild’s investment journey >> Click here

Gifting allowance

  • Everyone has an annual inheritance tax free gifting allowance of £3,000.
  • Gifts over £3,000 only become IHT exempt if you survive 7 years from the date of the gift.
  • You are able to carry this allowance over for one tax year, so if you didn’t use it last financial year you will be able to gift up to £6,000 without potential IHT.

 Pension allowance

  • Your pension allowance is the lower of £40,000 in a tax year, or 100% of your earned income.  Personal contributions can make a difference to your finances in retirement.
  • If you’re a high-rate taxpayer, a pension contribution before the tax-year end can bring you below this threshold, reducing your tax bill.
  • You can carry forward any unused allowances from the three previous tax years – starting with the earliest tax year first. Speak to us to discuss these workings.

Capital Gains Tax allowance

  • There are big changes in the CGT allowance following the Autumn budget, with the allowance reducing from £12,300 to £6,000 in 23/24 and dropping further to £3,000 in 24/25.
  • If you’re planning to sell any property or high-priced assets, we will be happy to advise you.

 

Should you wish to speak to us to discuss any of these matters please call us on 01803 873978 or complete the form below and we will be in touch:

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