New Year’s Resolutions
It is at this time of the year that we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.
Maximising your ISA allowances for the 2019/20 tax year (currently £20,000 each) is an obvious tax planning point. An ISA allowance is often described as a tax wrapper that protects your money from the taxman.
A cash ISA can be used to future proof your money in case regulations or economic circumstances change, including scenarios like:
- interest rates go back to pre-financial crisis levels.
- you move up a tax bracket
- the personal savings allowance is cut
- you want to move into stocks and shares
- you want to pass on your ISA after your death
For those looking to do some inheritance tax planning it would be a good time to review (or make) your Will.
You might also want to consider increasing your pension savings before 5 April 2020 as the unused annual pension is lost after three years.
Depending on their earnings, the maximum pension contribution for most taxpayers is £40,000 each tax year. This limit covers both contributions by the individual and their employer. Note that under the current rules the net after tax cost of saving £10,000 in a personal pension for a higher rate taxpayer is only £6,000.