Don’t lose sight of tax planning opportunities
The months of January, February and March are a good time to take stock and make plans for the year ahead. It is also a good time to get to grips with solutions that help to mitigate the impact of tax and capitalise on opportunities to grow and protect your wealth.
Making sure this year’s ISA allowance doesn’t go to waste is one important step towards helping create wealth for the future. For example, parents might want to use their own allowances and then start investing in a Junior ISA for a child. Annual limits (£20,000 and £9,000 respectively) should be maximised by 5 April 2021, as any unused amounts cannot be carried forward.
Chances are there are also things you can do to bring your retirement goals closer to fruition. So, maybe think about investing a lump sum or increasing monthly payments into your pension plan. Thanks to tax relief, your contributions are boosted by 25% immediately. If you pay more than the basic rate of Income Tax, you may be able to claim extra tax relief through your self-assessment tax return.
Finally, it could be a good time to think about legacy planning. If your estate is likely to be hit by a future Inheritance Tax (IHT) bill and you can afford to give some money away, now could be the ideal time to do it. You can give away up to £3,000 each tax year without it being added to the value of your estate for IHT purposes. You can also make use of any unused gifting allowances from the 2018/19 tax year.
As the end of the tax year approaches, it’s a good idea to ensure you are making the most of tax-saving opportunities that may be lost after 5 April. I would welcome the opportunity to spend some time explaining how you can get maximum advantage for this year and the years to come.