As we fast approach the end of the tax year 2020 – 2021 there is a lot to look back on over the last year, clearly COVID-19 has had a big impact on many lives up and down the country.  We want to highlight some simple Financial Planning considerations that can help now and moving forward.  Please be aware you only have up until the 5th April 2021 before these allowances are lost. 


Let’s take a look at a some of the options open to you, there are other options allowances available, and we would be happy to discuss these further if required:- 

Maximise ISA Allowances: 


An ISA is an Individual Savings Account, meaning this can only be held in your sole name and not joint names.  An ISA offers you the joys that unlike a typical savings account the growth is deemed as being tax-efficient or tax-free so you could get more for your money. 

You can save a maximum of £20,000, for those under the age of 18 can save into a Junior ISA £9,000
An ISA can be held either in cash or as 

Personal Savings Allowance: 


From April 2016 Banks and Building societies no longer tax your savings thanks to the personal savings allowance. 
Put to this simply if you are a basic rate taxpayer you can earn up to £1000.00 in interest tax free.  If you are a higher rate taxpayer e.g. earnings in excess of £50,000 you can earn up to £500 in interest tax free. 
If you are classed as an additional rate taxpayer e.g. earns in excess of £150,000 there is no personal savings allowance, and you will need to pay tax on all of your savings. 

Dividends:


For the current tax year, the dividend allowance has been set at a tax-free dividend amount of £2,000.  It is worth noting this is in additional to your own personal allowance which is the amount you can earn before paying tax on your income.  To put this into practice, your personal allowance is set at £12,500 before you pay tax, add the dividend allowance in and you can achieve an income of £14,500 without additional tax. 

Capital Gains Tax:


Capital gains tax (CGT) is a tax on the profit when you sell something that has increased in value.  CGT provides an allowance of £12,300 (£6150 for trust) which is tax free. 
CGT has different rates to pay over and over your tax-free allowances, these depend on whether or not you are a basic rate or higher rate taxpayer. 
Basic rate 10% on gains 18% on gains on residential property (not your main home) 

Higher rate20% on gains 28% on gains on residential property (not your main home) 

Pension Contributions:


Pensions have an annual allowance limit that you can contribute that will allow you to receive tax relief on the money going in, this is based on earnings and capped at £40,000. 
If you have missed previous years pension contributions and have the relevant income and savings to match you can make use of these previous year’s allowances for the last three years plus the one, we are in, in short you could contribute up to £160,000 into a pension. 
If you have already started to draw your pension income this limit is capped at £4,000
You can also make contributions to a pension if you have no relevant Uk earns or a grandparent wanting to save for a grandchild, the maximum you can contribute is £3,600

Marraige and Married couple’s allowance:

The marriage and married couples’ allowance simple allowance a couple to share part of their own personal allowance between spouses assuming one is a nil rate taxpayer and the other is a basic rate taxpayer.  You can claim back the last three years plus the tax year we are in. 
By making use of the allowance will broadly save you £250 in tax each year. 

If any of the above areas of Financial Planning areas have resonated with yourself and not sure where to start, please give us a call on 01483 654135, we’d be happy to discuss these in further detail. 

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.