Tax rules are always changing, therefore it is vital to keep up to date with them. Therefore we are sharing our top tips that will help you to ensure you are paying as little as possible whilst maximising your savings.
USE YOUR ISA ALLOWANCES
From April 2017, the ISA allowance increased to from £15,240 per person per year to £20,000. Remember, you can hold any combination of cash and stocks & shares up to this new limit. Most noteworthy, ISA proceeds are not subject to income or capital gains tax. Remember, that if your allowance isn’t used, you can’t roll it over and therefore it’s lost.
USE YOUR PERSONAL SAVINGS ALLOWANCE
Using your personal savings allowance, the first £1,000 of savings interest will be free of tax (£500 for higher rate income tax payers). Furthermore, bank and building societies will now pay interest without tax deducted.
MAXIMISE TAX RELIEF ON PENSION SAVINGS
Contributions to pension schemes receive tax relief from the government. Non and basic rate tax payers get 20%, with up to 45% for higher rate payers. If you’re not taking your pension income, the maximum amount you can put into a pension plan is £40,000. Furthermore, you can also bring forward unused allowances from the last three years.
TAKE OUT A PENSION PLAN FOR YOUR SPOUSE
When you retire, your spouse will have a personal allowance to offset against tax on their income. Therefore it’s very attractive to consider building some pension savings up in their own name. Consequently, investing in a pension for a non-earning spouse is the solution. They can pay in up to £2,880 pa and the government adds £720 in tax relief, even if they don’t pay tax or even have an income now.
USE PERSONAL TAX ALLOWANCES
The personal allowance this year rises to £11,500 per person. Therefore, if you’re married (or in a civil partnership) and your spouse earns less than you, consider moving interest generating investments into their name to use up their personal allowance and basic rate tax band.
In conclusion, there are a number of ways in which you can maximise your savings. For more information or to speak to a dedicated adviser, simply complete the form below and we will contact you.