Get Ahead of the End of the Tax Year!

Category: Tax Year End

We are just passed the halfway point for the tax year. Whilst we still have five months to go, we would like to take a moment to remind you of the individual tax allowances that are available that will be lost at the end of the tax year. Some of these allowances are due to change so please ensure you speak to your adviser if you have any questions.

ISA Allowance

You have an ISA allowance of £20,000 for the 2023/24 tax year. This will not carry forward to the next tax year and so we always recommend that this is utilised where possible. You will have the same allowance in the 2024/25 tax year. Funds in an ISA will grow free of any tax, and this is regularly the first allowance  to use in financial planning.

Capital Gains Allowance (CGT)

For the current tax year, you have a CGT of £6,000. Like with the ISA allowance the, this allowance doesn’t carry forward to the next tax year and will be lost if not used. For the 2024/25 tax year this will reduce from £6,000 to £3,000. Please bear this in mind and speak to your financial life planner if you are considering disposing of any assets.

Dividend Allowance

This currently stands at £1,000 and is being reduced to £500 for the new tax year. For anyone who has direct shares or investments in a General Investment Account to be mindful of this it becomes more likely that that you will breach this allowance. To put this in perspective,  it would only require a yield of 4% on an equity portfolio worth £12,500 to generate £500 of dividends. Please speak to your Financial Life planner if you have any concerns.

Pension Contribution Limit (Annual Allowance)

The Annual Allowance for the current tax year was raised to £60,000 by the chancellor in the Spring Budget. Unlike with the allowances we have touched on already, this will be available next year due to the ‘Carry Forward’ rules. The ‘Carry Forward’ rules mean that you can carry forward unused annual allowance from the three previous tax years. You will need to use the full £60,000 in the current tax year before you are able to carry forward from previous tax years.

If you’re unsure about what your tax allowances you have left, or would like to utilise what you have available, please do get in touch!

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