With the new tax year starting, now is the ideal time to review your tax affairs and take advantage of new, simple planning opportunities, which could reduce your tax liability over the year and beyond. New research from Unbiased.co.uk shows that despite the financial worries facing those in retirement, taxpayers are set to waste an average of £421 each by failing to take advantage of the incentives, reliefs and credits available to them.
- New ISA limit— ISAs are an extremely efficient way of protecting your savings and investments from tax. The amount you can save tax-free in an ISA rises in 2013/14, from £11,280 to £11,520. A maximum of £5,760 can be saved in a cash ISA, and a further £5,760 can be invested in a stocks and shares ISA in the same year. The sooner you use your ISA allowance, the more money you will keep from the taxman.
- Personal allowance increase for the Under 65s - The rules around personal allowances, the amount individuals can earn each year before paying tax, are changing. The personal allowance for under-65s increases from £8,105 to £9,440. However, please remember that the personal allowance for 65-74 year-olds has been frozen for the first time, at £10,500. The personal allowance for those aged 75 and over has also been frozen at £10,660.
- State pension increase – Remember that the start of this new financial year also signals a rise in the basic state pension from £107.45 per week, to £110.15 per week in 2013-14.
- Pension contributions — Currently, tax relief is available on pension contributions of £50,000 per tax year. However, from April 2014 this will reduce to £40,000. The lifetime allowance will reduce from £1.5m to £1.25m at the same time. If you are approaching retirement you should consider maximising pension contributions each tax year before the allowance reduces.
- Inheritance Tax —The IHT threshold has been frozen at £325,000 for the third year running and will remain there until April 2018. However, there are schemes available which will help you pass on your financial legacy to loved ones, without having substantial sums go to the taxman. Attend our free seminar ‘Keeping your money in the family – how to have your cake and eat it’ to find out more.