Now the joys of Christmas and New Years are behind us for another year, this is the ideal time to beat the end of tax year rush. It’s a great time to make use of valuable allowances to help reduce your tax bill and ensure your finances stay tax efficient.

Acting in good time before the tax year ends (5th April 2022), will ensure you make the most of these allowances and gives you peace of mind knowing you’ve taken action.

For clients who have regular planning meetings with us, a lot of the tax planning has or is being done. However, things do come up that change your circumstances, so if that’s the case make sure you let us know.

Below are some common allowances that you could be taking advantage of:

Using your ISA allowances

ISA allowances enable your savings to grow free of income and capital gains tax. The current ISA allowance is £20,000, so it could be worth reviewing if you have fully used it and if not, whether there is the opportunity to use all or some of this allowance.

There are also allowances available for a Junior ISA if you are saving for a child’s future or the Lifetime ISA if you’re likely to be a first-time buyer in the future.
It is worth noting ISA allowances are ‘use it or lose it’ and can not be carried forward to future tax years.

Pension Contributions

Pension contributions qualify for tax relief and money held within pensions also grows free of income and capital gains tax. Personal contributions will have 20% income tax relief added to the contributions by the pension scheme, while higher/additional rate taxpayers can claim additional tax relief through their self-assessment. For those with income over £100k, pension contributions could lead to individuals reclaiming some or all their personal allowance, which is an effective tax relief of 60% on the contribution.

Business owners can also benefit from contributions that are made directly from the company. These count as a business expense so reduce the corporation tax bill and help move cash from their business to their personal assets in a tax efficient manner.

There are maximum allowances to be aware of, which we are on hand to help clarify.

Contact Ovation

ISA and Pension contributions are just a couple of things to consider prior to the end of the tax year. If you would like to discuss your circumstances and review potential opportunities, please get in touch now so we can provide you with our guidance and expertise. You can then relax in April knowing all the work required has been done.

You can use the secure messaging within MyOvation to contact your advisor or call the team on 0117 942 4333.