New year’s resolutions to save tax

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.

Pension Planning

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. For more information or for help with any of the advice on this page, please contact us on 01295 477 250 alternatively you can email [email protected].