Tax Year End: Time to save…

With the end of the tax year fast approaching you have up until midnight on the 5th April to use your remaining reliefs, exemptions and allowances.

ISAs2018/2019 2019/2020 
Adult ISA £20,000£20,000
Help to Buy ISA
Lifetime ISA £4,000
Junior ISA £4,260£4,368

Any interest, income and gains made within an ISA are completely tax free. Individuals can save up to £20,000, couples can double up to a total of £40,000 tax free saving. On death, spouses can now inherit their late partner’s ISA allowance via an Additional Permitted Subscription.

Help to Buy ISAs and LISAs will help first time buyers save for a deposit quicker. In addition to the tax free status, the government provide an added kicker in the form of a 25% bonus. The Help to Buy ISA contribution is capped to £200 each month after a maximum of £1,200 in the first month of opening. The LISA on the other hand gives complete flexibility on how you make contributions up to the £4,000 limit. Any amount invested in these schemes forms part of the £20,000 overall Adult ISA allowance.

Junior ISAs are available for children under the age of 18. For the two year window between the age of 16 and 18 a child will have access to both the Adult ISA and the Junior ISA, meaning even greater potential for tax free saving.

ISAs are use it or lose it allowances meaning if you don’t subscribe within a tax year, the unused entitlement will be lost forever.

Pensions2018/2019 2019/2020 
Annual Allowance £40,000£40,000
Money Purchase Annual Allowance (MPAA)£4,000£4,000
Lifetime Allowance £1,030,000£1,055,000

Tax relief on pension savings is available on contributions up to £40,000, subject to having sufficient relevant UK earnings. Those with earnings in excess of this figure could potentially utilise unused allowances from the previous three tax years through conducting a “carry forward” exercise.

If you have already accessed your pension benefits flexibly, your pension input will be restricted to just £4,000 a year from that point going forwards. However, it is important to note tax relief on pension contributions is available all the way up until age 75.

The lifetime Allowance is the total amount of pension savings you can accumulate without suffering a tax charge on the excess. This increases by £25,000 to £1,055,000 in the new tax year, with further rises in line with the Consumer Price Index going forwards.

Inheritance Tax 2018/2019 2019/2020 
Nil rate band £325,000£325,000
Main residence nil rate band£125,000£150,000
Annual gift exemption £3,000£3,000
Small gift exemption £250£250

Upon death from 6th April, £475,000 worth of assets including your family home if left to direct descendants, will escape inheritance tax. For a married couple, this equates to a total of £950,000 on last death.

Individuals have an annual exemption of £3,000, up to which gifts can be made free of inheritance tax each year. It is also possible to make small gifts of up to £250 to any number of people, not including someone who has also benefitted from the annual exemption.

Miscellaneous 2018/2019 2019/2020 
Personal savings basic rate tax payer £1,000£1,000
Personal savings higher rate tax payer £500£500
Personal savings additional rate tax payer Nil Nil 
Dividend Allowance£2,000£2,000
Capital gains tax exemption£11,700£12,000
Married couples allowance £1,190£1,250
Rent-a-room tax free income  £7,500£7,500

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