Tax year-end: Financial tasks to complete before 5 April

Sponsored Content

At the start of the pandemic, practical necessity and looking after our loved ones became everyone’s utmost priorities.

But as the vaccine rollout and booster program continues, Rhodes Brook Financial says we can and should turn our attention to the important longer-term matters such as our personal financial planning and thinking about our investments.

Keeping this in mind, listed below are four key tasks you should be considering in the run-up to the end of the tax year on 5 April.

Make the most of your ISA allowance

ISAs can be a great way of making your money work harder for you, as any money you put into them is free of any further liability to Income Tax or Capital Gains Tax – so no tax on your interest, no tax on withdrawals and no tax on the profits.

You can put up to £20,000 per person into an ISA this tax year (ending 5 April). They’re also a great way to start investing in stocks and shares – because, as well as giving you all these tax benefits, they’re very simple . One of the few downsides is you can’t carry forwards any ISA allowance you don’t use in a single tax year – so use it or lose it before 5 April!

Pay what you can into your pension

Generally speaking, a pension is a tax-efficient way of saving for your retirement and due to greater choice and flexibility, it’s a more attractive option for retirement savers than ever before.

It’s worth thinking about topping up your pension as much as you can before the end of this tax year (5 April) and using any unused allowances from previous tax years, as it’s possible the government could change the tax allowances available to you – so you should use them whilst you can!

Use your gifting allowances to avoid unnecessary IHT

Unfortunately, too many families are still getting a tax shock when their parents or grandparents die, as the government received a whopping £5.2 billion in Inheritance Tax in 2019/20 (HMRC, 2020).

One of the easiest, and potentially rewarding, ways to reduce a future Inheritance Tax (IHT) bill, is to give some of your wealth away during your lifetime and use your gifting allowance before 5 April. Both you and your partner or spouse can each pay your children or grandchildren up to £3,000 a year and it will be deducted from your total estate if you die.

Don’t fall into the CGT trap

Capital Gains Tax (or CGT) is one of the most complex taxes to understand, so it’s no shock that people fall into the trap of paying unnecessarily or end up being fined for not paying when they should. This is also made worse by the myth that only the very wealthy are likely to have to pay it.

You’re liable for CGT when you sell an asset at a profit. This could be anything from a second home to stocks and shares – or even valuable items such as jewellery or antiques, which is where people often fall foul of the tax.

There’s a tax-free allowance of £12,300 for this year, then after that, the rate is dependent on the level of income tax you pay – 10% for basic-rate taxpayers and 20% for higher-rate payers (and 18% and 28% respectively if you’re selling a property).

It’s possible the government will increase CGT in the future, to be more closely aligned with income tax rates – so it’s worth making the most of this year’s allowances and current rates if you can.

Please don’t hesitate to contact us at Rhodes Brook Financial if you wish to have a no obligation chat regarding how you can make the most of your financial situation before the tax year-end.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Rhodes Brook Financial Limited is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products.

Related posts:

Unexpected tax traps to watch out for – and how not to fall into them The tax-savvy way to help give the next generation a head start Setting personal goals and making them happen Do you need Financial Advice? Areas where you may benefit from some guidance Understand the issues to find the right Individual Savings Account (ISA) Diversification in investment: not putting all your eggs in one financial basket