Written By Marcus Rayer
The beginning of a new year is a great time for reflection, especially where your finances are concerned, as in less than three months we will enter a new tax year. Before the end of the 2022/23 tax year, it is wise to review your financial arrangements to ensure you are maximising any allowances you may be eligible for.
Have you topped up your ISA(s)?
The amount you can save in an ISA in the 2022/23 tax year is £20,000, including Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs* and Innovative Finance ISAs. Whereas, the current Junior ISA annual allowance is £9,000 (Junior Cash ISA, Stocks and Shares Junior ISA). There is no carry forward of ISA allowances, so if you do not use it, you lose it! This is an incredibly important tool to save and grow your wealth in a tax efficient manner, also providing a quick fix if you have yet to make the most of your allowances this tax year.
Download our ISA Guide here for more information on ISAs and allowances.
Have you made any gifts this year?
Each UK resident can gift up to £3,000 tax-free each tax year, which reduces the size of their estate for Inheritance Tax (IHT) purposes at the same time as being tax efficient. There are also further gift exemptions available for wedding gifts, gifts out of income and small gifts.
In contrast to ISA allowances, it is possible to carry forward your unused gift allowance from the previous tax years. For example, if you made no gifts in 2020/21, you can gift up to £6,000 in 2022/23. Any gifts made which do not fall within one of these allowances, are not necessarily subject to any immediate tax but could become a Potentially Exempt Transfer. These are gifts that are tax free if you live for 7 years or more after gifting.
For more information on gifts, inheritance tax and estate planning, download our Estate Planning Guide here.
Have you paid into your pension?
Pensions can be excellent vehicles for saving towards retirement and also have an annual allowance. Generally, the maximum amount that can be contributed to your pension in total each tax year is £40,000. If you are yet to use your full allowance from any of the previous three tax years, you might be able to carry the remaining forward and use it in the current tax year – meaning you can contribute up to a maximum of £160,000 in cases where this has been unused.
Read more on how you can make your pension a priority in 2023 here.
If you require any assistance with your preparations for the 5th of April end of tax year deadline, get in touch with an Integrity365 Independent Financial Adviser who will be able to review your current arrangements and structure a tax efficient plan aligned to your goals.
*£4,000 max and can only be opened by 18–39-year-olds
Written By Marcus Rayer
