Use or lose your 2019/2020 annual tax allowances before 5th April 2020
Monday 27 January, 2020
Our Financial Adviser for Hertfordshire & North London, Cheshunt, Waltham Abbey and Hertford, Vishal Gulrajani explains what tax allowances are available to you for the 2019/20 tax year.
Remember you have until 5th April 2020 to use or lose your tax allowances, so contact the Thomas Oliver financial planning team on 01707 872000 for financial advice.
What are your ISA allowances?
You can invest the whole of your individual ISA allowance of £20,000 in a Stocks & Shares or cash ISA before April 5th, 2020. Alternatively, you can use the combination of the two up to £20,000. A couple can invest £40,000 in their ISA’s in the tax year 2019/2020. Remember any withdrawals from an ISA are not subject to capital gains tax or income tax.
Invest into a Lifetime ISA
If you qualify for a Lifetime ISA, you can contribute £4000 in 2019/20 which will use £4000 of your overall £20,000 ISA limit. A couple can invest £8,000 into a Lifetime ISA in 2019/20 which will use £8000 of their overall £40,000 ISA allowance. Read more in our article – Step onto the property ladder with a Lifetime ISA.
Invest on behalf of your children into a Junior ISA
If you have a child under 18 who does not have a Child Trust Fund you should be eligible to open a junior ISA for them worth £4,368 in the April 2019/20 tax year. Please note just like an adult each of your children could have a cash ISA or a stocks and shares ISA or a combination of the two up to £4,368.
Claim tax relief on any pension contributions
If you are a UK taxpayer you will normally be able to claim tax relief on pension contributions up to 100% of your earnings or an annual allowance of £40,000, whichever is the lower figure in the 2019/20 tax year. From 6 April 2016, individuals who had ‘adjusted income’ (total taxable income including all pension contributions) of greater than £150,000 in the tax year had their standard annual allowance (£40,000) for that tax year restricted so for every £2 of income they earned above £150,000, was reduced by £1 with the maximum reduction at £30,000. However, before the reduction is calculated or included there is a second assessment called threshold income which means a consumer could have adjusted income over £150,000 but their annual allowance is not reduced.
Set up personal pension for family members
You can set up personal pensions for members of your family who do not work or who are under 18 years of age. Contributions of up to £2,880 (£3,600 gross after pension tax relief is reclaimed) can be made by, or for, all UK residents including grandchildren or children.
Vishal Gulrajani Financial Planner in North London, Goffs Oak, Cheshunt, Waltham Abbey, Hertford & Hertfordshire said:
‘There’s only two months left before the new tax year, so I urge all my clients to review their finances now and make use of this year’s pension and ISA allowances as you don’t want to regret not using these tax allowances in the future. Remember you need time to review your finances and create a workable financial plan and solution. This doesn’t happen in a day so if you want financial advice the more time you give a financial planner the more thorough your financial solution will be. I have given you a brief overview of many of the tax allowances that are available to you. It can be very complex when we consider pensions and analyse carry forward allowances, adjusted income and threshold income along with tax efficiency. As a result, when our financial planning team conduct client reviews, we will go over all the details and explain this in simple terms so you have a better understanding of ISA and pension allowances. We recognise that all our clients are different and have various needs and requirements, so we offer financial advice and provide you with a personalised financial planning service that is unique to you.
If you are unsure which tax allowances are available to you and would like a financial adviser to review your financial circumstances please contact our North London financial planning team on 01707 872000. The Thomas Oliver financial planning team offers financial advice in North London and Hertfordshire and has clients in Enfield, Tottenham, Barnet, Goff’s Oak and Cheshunt.