With just a few weeks left until the new tax year begins, it’s the perfect time to make sure you have fully utilised your 2018/19 allowances before you lose out. Here are just some of the areas you should review before the 5th April 2019.
This tax year you can put £20,000 in an ISA, which means you won’t have to pay tax on these savings or investments. The £20,000 allowance doesn’t roll over, so it’s worth looking at your savings accounts now to see if there’s money you can move.
When you save into a pension, the government usually gives you a top up as a way of encouraging you to save for your retirement, which is called tax relief. Basic-rate taxpayers get 20% tax relief, higher-rate taxpayers receive 40% and additional-rate taxpayers get 45%.
You usually get tax relief on pension contributions of up to 100% of what you earn, or £40,000 in each tax year (whichever is lower).
If you’re on a higher income of £150,000+, you might not be able to save as much tax efficiently. It’s worth talking this through with an adviser. It’s also important to note that you can carry forward allowances from the last three years if you were a member of a registered pension scheme during this time.
Have you used your Capital Gains Tax (CGT) allowance this year? You can earn £11,700 per year in profits from selling assets including shares (excluding those in ISAs), second homes and valuable possessions. If you were planning on selling any of these soon, and you haven’t used your full CGT allowance yet, it could be worth doing so before April.
National Insurance contributions
It’s also a great time to review your National Insurance contributions and whether you’ve made enough to qualify for the full State Pension. If not, it is possible to fill the gap by making voluntary payments, as the cost of doing so is set to rise significantly after April.
Each tax year, you can give away £3,000 which won’t be subject to Inheritance Tax if you die. Amounts greater than £3,000 can later become subject to Inheritance Tax if you die within 7 years. If you don’t use your exemption this year, you can carry it forward for one tax year.
If you have any questions about the new tax year, please get in contact with our team on 01794 525500.