05 Apr 2012

End of Tax Year

End of Tax Year

News and Views from Steven Ritchie, Financial Adviser regarding the new tax year, including new ISA & CGT allowances.

News and Views from Steven Ritchie, Financial Adviser regarding the new tax year, including new ISA & CGT allowances.

The start of the tax year in April provides a good opportunity to fine tune your finances. Assessing your options early will help to avoid costly mistakes and also enhance your overall wealth.

The Individual Savings Account (ISA) allowance increases to £11,280 per individual. This is £600 higher than the current limit and will continue to rise annually in line with inflation. Maximum use of this allowance should be considered a priority as ISA’s are extremely tax efficient and provide a shelter from both income and capital gains tax.

The Capital Gains Tax (CGT) allowance for 2012/13 remains unchanged at £10,600. CGT is a tax charge that arises from the disposal of assets, such as shares or buy-to-let properties. Gains in excess of the allowance are charged at 18 per cent for lower and 28 per cent for higher rate tax payers. This limit applies to each individual, so if you are married or in a registered civil partnership you each have an annual exemption and should ensure that you maximise your CGT free gains.

The annual Pension allowance also remains unchanged at £50,000. This sum is inclusive of your own contribution and any other amounts paid into an approved pension scheme. Contributions paid by you to a personal pension plan or a stakeholder pension scheme are made net of 20 per cent basic rate tax. This means that for every £100 you want to save, you pay only £80. Tax relief of £20, topping your contribution up to £100, is then added by HM Revenue & Customs (HMRC). If you are a 40 per cent higher rate tax payer, you may be able to claim additional tax relief.

Habit means we tend to wait until the end of the tax year to think about what we can do to save ourselves some money- might be an idea to get in early this time and do something at the start!

Steven Ritchie, Financial Adviser

Regulated by The Law Society of Scotland.  Authorised and Regulated by the Financial Conduct Authority. 

The Financial Conduct Authority does not regulate tax advice.


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