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A cornerstone of financial planning is ensuring that people take advantage of their allowances, so wherever possible, we encourage our clients and their family members to maximise contributions.
The current Tax Year ends on April 5th 2022, which may seem like a long way off but it’s a busy period for everyone. To make sure your allowances are used efficiently, it pays to start early.ISAsThe total contributions limit across all ISAs for adults is £20,000 for the 2021/22 Tax Year, although there is a £9,000 allowance for funding Junior ISAs.PensionsThe amount you can contribute towards your pension before incurring a tax charge is capped at £40,000 per Tax Year. However, if you are a high earner (this is income from all sources) then you will have a reduced, or tapered, allowance.
It’s also possible to contribute up to £3,600 to junior pensions and to top up your partner’s pension each yearCapital Gains Tax (CGT)The 2021/22 CGT allowance is £12,300, so if you’re considering disposing of or transferring an asset that’s eligible for CGT (a second property or investments outside an ISA, for example), please speak to your adviser.Inheritance Tax (IHT)If you have a gifting strategy set up already and you’re using it to gift money in the current Tax Year then there’s no further action to take. However, if you do not have an agreed strategy in place, the earlier you start, the easier it is to mitigate the impact of IHT on your estate.If you have already maximised your allowances for 2021/22 in consultation with your adviser, then you don’t need to take any further action. However, if you have family members or friends who could benefit from our advice to ensure they’re doing the same, please let your adviser know.Important
Each of these aspects of financial planning are complex, so we recommend speaking to your adviser before taking any action yourself in a non-advised capacity, as unexpected tax charges can arise.