Don’t leave it till the last minute to use your allowances!

Category: Annual Allowance & Tax Year End

Unbelievably, we are already coming to the end of January – how did that happen?

Now is the perfect time to ensure you use up all your allowances before we get to the end of the tax year.


Every adult has a £20,000 allowance each tax year. If you are not able to contribute the full amount, anything that you can invest will grow free of tax and can be withdrawn tax free. This money is accessible (subject to the timescales involved in selling the funds) but you should bear in mind that Stocks and Shares ISA’s should be viewed as medium or long term investments.

Junior ISA’s

Under 18’s (or anyone that has an interest in the child’s financial future) can contribute up to £9,000 each tax year. If you are able to contribute on behalf of your children or grandchildren, this is a good way to start building a nest egg for them. Bear in mind however that once invested, the money belongs to them. They can take control of it at age 16 but can’t withdraw it till age 18.


Subject to your earned income, you (or you employer) can pay up to £40,000 each year into a pension. High earners or those who have already taken income from their pensions might have a lower allowance.

One of the great things about pensions is that contributions are eligible for tax relief. This is a substantial benefit and boosts your investment from the outset.

Remember however, that pensions are not accessible till you are aged 55 (or 57 from 2028) so you should only invest money that you won’t need before then. When it comes to taking income from your pension, you can take 25% of the fund tax free. The remainder is taxed as income.

Personal allowance

This is the amount of money you can earn before you must pay income tax.

This is made up of employment earnings, interest, dividends, rental income, and profits from a business. Bear in mind you start to lose your personal allowance if your earnings hit £100,000.

If you are not using all of your personal allowance, if you are eligible, you may be able to withdraw some money from your pension to use up any unused personal allowance.

Capital Gains Tax Allowance

You are entitled to make gains on the disposal of any assets or investments of up to £12,300 per tax year before you must pay Capital Gains Tax. It is advisable to try and use this allowance each year if possible so that you don’t build up gains that are heavily taxed when you come to sell them.

If you would like to discuss the above, please get in touch with us and we’ll be happy to take you through your options.

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