It’s 2020 and a new year has just begun, but the end of the tax year is only a few months away. This means there are only a few months to ensure you optimise your taxation for this financial year.
Maximising ISA allowances
Savers have an annual limit of up to £20,000 to enjoy this tax year. Where possible this should be topped up before the end of the tax year, when it resets. There are a wide range of tax-efficient ways to contributing to an ISA, including cash or stocks and shares.
Review pension contributions
Similar to ISA’s, there are annual limits to pension contributions. This is set at either 100% of your gross salary, or £40,000, whichever is lower. This applies to both individual and employer contributions.
Giving a cash gift can be an effective form of inheritance tax mitigation. Cash gifts are subject to an annual limit, which is also reset each year.
Up to £3,000 can be gifted each year, tax free.
Capital gains allowance
Tax relief on any profits you make from an asset is also constrained by an annual allowance for the financial year.
This year it is set at £12,000. This doubles for any jointly owned assets in a marriage.
The capital gains allowance can not be carried over to next year, so it is important to review any gains made, before April 6th.