Using your ISA allowance
You have £20,000 to invest tax-free in your ISA before it resets on 6 April, so use it or lose it. You also don’t have to declare ISAs on your tax returns.
If you feel like you’re missing out because you don’t have any new money to invest, do you have any investments in other accounts that you could sell? You could then move the proceeds into your ISA. This is a common way to make the most of your tax-free ISA allowance (although this will also use some of your Capital Gains Tax allowance).
Paying into your pension
Your annual pension allowance is £40,000 (but it is limited by the amount you earn each year). This can be carried over from the past three years if unused, meaning you could save up to £120,000 extra before the end of this tax year. Find out more about pension carry forward.
The Government tops up pension contributions by 20% automatically. However, higher or additional-rate taxpayers receive an extra 20-25% tax relief when they submit their tax return.
If you need a new home for your pensions, have a look at our multi-award winning personal pension – the Best SIPP*.
The Dividend Allowance
You can currently receive £5,000 of dividend income before having to pay any Income Tax. But it is important to remember that this is reducing to £2,000 on 6 April 2018 – the start of the new tax year.
If you rely on dividend-paying investments for an income, could you sell the investments and rebuy them in your ISA? This will allow you to avoid paying unnecessary tax on any dividend payments. Again, this will use some of your Capital Gains Tax allowance.
Capital Gains Tax
This is the tax you pay on any profits from selling assets. The allowance is £11,300 and you cannot move it across to the next tax year if you don’t use it – so you have until 6 April to make sure you've made the most of it.
If you’re concerned about the allowance changing or about a future tax charge, you could consider selling some of your assets this tax year so you don’t waste your allowance.
More sophisticated options
Some other, more sophisticated options to consider are Venture Capital Trusts, the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme. These investments offer high levels of tax relief because they are very risky – they invest in small and young companies. They are only suitable for certain investors who can tolerate these risks and are planning to invest for at least 5 years.**
You can see whether these sophisticated options could be right for you by downloading our tax-efficient investing guide.
If you want to learn more about tax-efficient saving or cutting a tax bill, get in touch by calling 020 7189 9999 or emailing email@example.com.
This is not advice to invest, or to use any of our services.
*Before you consider transferring a pension, it is important to ask yourself: Will I lose any valuable benefits or features from my existing pension plan? Will I incur any penalties on my existing pension if I transfer? Is it an occupational final salary pension scheme (in which case it is very unlikely to be advisable to transfer)? Have I considered the charges on my current plan (a new arrangement may be more expensive, especially if you have a stakeholder pension)?
**VCTs, EIS and SEIS should all be regarded as higher risk investments. They are only suitable for UK resident taxpayers who can tolerate higher risk and have a time horizon greater than five years.
Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. If you are in any doubt as to the suitability of an investment, please contact one of our advisers. Please note we do not provide tax advice.