The change of the tax year is always a good time to review your finances and assess your opportunities. Below are just a few reminders of the types of considerations you may have at this time.
We recommend that you speak with your financial adviser about your personal circumstances and the options available to you. If you do not have one, you can obtain a list of advisers in your local area at www.unbiased.co.uk or by calling Unbiased on 0800 023 6868.
Take advantage of your unused pension allowance
You can carry forward any unused Annual Allowance for pension contributions for up to three years, maximising the amount of tax relief to which you may be entitled.
For the 2020/21 tax year, the Annual Allowance is £40,000. This includes contributions made by you, your employer and any third parties.
If you have flexibly accessed your pension savings, then you will only be entitled to the Money Purchase Annual Allowance of £4,000, which cannot be carried forward.
Your financial adviser can help you to calculate your Annual Allowance, and you can find more information about how this works in the Technical Guide for your product.
Make the most of Capital Gains Tax (CGT) exemptions
If you hold investments outside of a SIPP or ISA (such as stocks and shares in an Investment Portfolio or GIA) and you sell or otherwise dispose of them (for example, as a gift), you may have to pay Capital Gains Tax (CGT).
It is therefore important that you make use of the annual CGT exemption, which is £12,300 for the 2020/21 tax year. If the gains on your investments exceed the annual exemption, then you are likely to pay additional tax.
Working out your entitlements and tax liabilities can be a complex matter, and your financial adviser will be able to guide you through this process.
Review your income requirements
Make sure you inform us of any changes to your income before the monthly cut-off date.
The deadline is typically 10-15 days prior to our payment to you, which is made around the first business day of each month.
View all deadlines on our Payroll Cut-off page
Utilise your ISA allowance
The maximum amount you can subscribe to an ISA in the 2020/21 tax year is £20,000. Your ISA grows free from capital gains tax or income tax, allowing you to focus on how your money is invested.
Please be aware that you cannot carry over any unused ISA subscription allowance to a new tax year, and any withdrawals you make do not free up any further allowance. Therefore you should speak with your financial adviser to ensure that you make the most of this opportunity every year.
Find out more about the Modular ISA