Time is running out to use these tax allowances

Every year you get new annual tax allowances for everything from ISA contributions to dividend income. Many of these allowances don’t roll over between tax years – so as we approach the end of the tax year, it pays to reviews yours and check that you’re making the most of them.

Lee Dooley
10 March 2017

ISA allowance

Your ISA allowance is £15,240 this year – going up to £20,000 in 2017/18. This allowance is the maximum you can pay into an ISA in a single year while taking advantage of their tax-free benefits. ISA allowances don’t roll over between tax years, so if you don’t use yours before 6 April you’ll lose it.

Pension contributions

Every year you can pay as much as you earn into your pension, usually up to a maximum of £40,000. This annual allowance shrinks by £1 for every £2 you earn over £150,000, down to a minimum of £10,000. If you have enough earnings you may be able to carry forward unused annual allowance from the last three tax years.

You get tax relief on pension contributions up to your annual allowance, so it makes sense to use as much of it as you can if you want to take advantage of a top-up from the taxman when saving for retirement.

Capital Gains Tax

If you own investments outside of your pension or ISA, you could pay Capital Gains Tax when you sell or transfer them. The annual Capital Gains Tax allowance is £11,100. This means you can make up to £11,100 of gains this tax year without paying tax on your profits – but you can’t carry the allowance over between years.

Personal Savings Allowance and Dividend Allowance

You won’t pay any tax on any interest from your savings accounts up to your Personal Savings Allowance. The allowance is £1,000 for basic-rate taxpayers or £500 for higher-rate taxpayers, but disappears for additional-rate taxpayers.

On top of your savings income, you can also receive up to £5,000 of dividend income from shares held outside of a pension or ISA without paying any tax. In the Budget 2017, Philip Hammond announced that the allowance would fall to £2,000 from April 2018.

Speak to an expert about your tax allowances

For more information about using your annual tax allowances, why not get in touch with one of our experts? Call us on 020 7189 2400 or email best@bestinvest.co.uk.

Important information

The value of your investment can go down as well as up, and you can get back less than you originally invested. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change. Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest.