With the new tax year now in full swing, now is an ideal time to review your finances to make sure you are making the most of the latest changes to the personal allowance, state pension and ISA limit.
- ISA limit increase —The amount you can save tax-free in an ISA has risen to £11,880. Currently, only half of this can be held in a cash Isa, while the full allowance can be placed in a stocks and shares Isa. However, as of the 1st July 2014, the government will create the New ISA (NISA), with a £15,000 limit. Savers will be able to use the full limit for either cash, investments or a mix of both. Any contributions made to an ISA between 6th April 2014 and 30th June 2014 will count towards the £15,000 limit.
- Personal allowance - The amount individuals can earn each year before paying tax has increased for those under 65 from £9,440 to £10,000. However, the personal allowance for 65-74 year-olds remains frozen at £10,500 and £10,660 for those aged 75 and over.
- State pension – The start of a new financial year also signals a rise in the basic state pension, which has increased from £110.15 to £113.10 per week in 2014-15.
- Pension contributions —Previously, a saver could make up to £50,000 a year pension contributions and receive tax relief on the amount. However, for 2014-15, the limit falls to £40,000. The lifetime allowance, the maximum amount of pension saving you can build up over your life that benefits from tax relief, has also reduced from £1.5m to £1.25m.
- Inheritance Tax - The IHT limits are unchanged for the new tax year, with the threshold frozen at £325,000.
- Capital Gains - The amount of capital gains you can receive tax-free has increased from £10,900 to £11,000. If the total gains per year from the sale of assets, including shares or a second property, minus any losses, exceed the annual allowance of £11,000, the excess will be liable for Capital Gains Tax.