How to Prepare for the End of the Tax Year

With the end of the financial year fast approaching, here are our tips on maximising your assets to make the most of your tax efficiency.

End of tax year

With the end of the financial year fast approaching, here are our tips on maximising your assets to make the most of your tax efficiency.

As always, the tax year ends on the 5th April in 2022. What does this mean for you? There are a number of steps you can take to make the most of your assets and boost your financial portfolio before the new tax year begins. Here, we outline some easy ways you can make sure you’re making the most of your investments.

Use your ISA allowance

Perhaps the most important thing to note is your ISA allowance. In the 2021/22 tax year, this personal allowance stands at a maximum contribution of £20,000. Not using this allowance might hinder your portfolio, as all income and investments from your ISA are completely tax free.

Before the end of the tax year, make sure to use your entire allowance – if you can. Feel free to get in touch with your Financial Advisor at Hamnett Wealth to discuss your options, or to see how much allowance you have remaining.

Boost your pension

Don’t forget about your pension. Your annual allowance for your pension remains at £40,000 for the 2021/22 tax year. This references the limit on contributions which can be made and which qualify for tax relief.

It’s worth noting that your personal allowance might differ, and we recommend that you get in touch with your pension provider or Financial Advisor for more information or advice on making the most of your pension.

Make the most of your capital gains tax allowance

Capital Gains Tax is a tax on the profit when you sell something that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive. This includes the sale of goods, shares, investment funds and second or inherited properties.

As an individual, you are entitled to a capital gains tax allowance of £12,300 for the current tax year. For those with a larger investment portfolio, you may need to ensure you’ve used as much as you can of your capital gains allowance before the tax year is up.

Making the most of your allowance can make a notable difference in your portfolio size. We recommend that you get in touch with your Financial Advisor at Hamnett Wealth to discuss making the most of your allowance.

Inheritance tax

In any given tax year, individuals are currently allowed to give away a total of £3,000 worth of gifts without them being added to the value of your estate. This is known as your ‘annual exemption’.

This allowance doesn’t have to be for one person; you’re allowed to split this across a number of your family and friends. Plus, don’t forget you can carry any unused annual exemption forward to the next tax year – but only for one tax year. At this point, it’s important to remember that last year’s allowance will be lost if not used by the 5th April.

Generally, if a gift is made more than seven years before your death to an individual, there will be no tax payable. It’s important to make the most of this allowance, so your family and friends can benefit.

Advice on your allowances

If you’re interested in receiving any advice on how to maximise your allowances before the end of the tax year, feel free to get in touch with your advisor at Hamnett Wealth. We’re more than happy to help!

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