As the end of the tax year on April 5th, 2025 approaches, it is crucial for individuals and families in Peterborough to review their financial situation and take advantage of available allowances and reliefs. Proper planning can help you minimise your tax liabilities and secure your financial future. Accountants Peterborough can provide expert guidance in navigating these complexities. This checklist will walk you through key areas to consider before the deadline.
Have You Maximised Your ISA Allowance?
An Individual Savings Account (ISA) is a tax-efficient way to save and invest. The government sets an annual allowance for how much you can contribute to an ISA without paying tax on the interest, income, or capital gains. For the 2025/2026 tax year, the ISA allowance remains at £20,000.
Peterborough residents should assess whether they have utilised their full £20,000 allowance before April 5th. Remember, this allowance is on a “use it or lose it” basis; any unused portion cannot be carried over to the next tax year.
There are different types of ISAs available, including:
Cash ISAs: These offer a straightforward way to save money with tax-free interest. They are suitable for those with a lower risk appetite.
Stocks and Shares ISAs: These allow you to invest in a range of assets, such as stocks, bonds, and funds, with any capital gains and dividend income being tax-free. They are generally considered for longer-term investments and come with a higher level of risk.
Lifetime ISAs (LISAs): If you are under 40, a LISA can help you save for your first home or retirement. You can contribute up to £4,000 per tax year, and the government will add a 25% bonus, up to £1,000 annually. However, withdrawals before age 60 (except for a first home purchase) incur a 25% penalty. This could be particularly beneficial for younger individuals and first-time buyers in the Peterborough area looking to get on the property ladder.
Junior ISAs: Parents or guardians can save up to £9,000 per tax year for a child under 18. The savings grow tax-free, and the child can access the money once they turn 18. This is a great way for Peterborough families to build a financial foundation for their children.
Consider your individual circumstances and financial goals to determine the most suitable type of ISA for you. Accountants Peterborough can help you understand the benefits and risks associated with each type.
Are You Boosting Your Pension Contributions?
Pension contributions also benefit from significant tax relief. For most people, the annual pension allowance is £60,000 or 100% of your earnings, whichever is lower. Contributions receive tax relief at your highest marginal rate. For instance, if you are a basic rate taxpayer, for every £80 you contribute, the government adds £20, effectively giving you £100 in your pension pot. Higher rate taxpayers receive even more relief.
Peterborough residents should review their pension contributions for the current tax year. If you have the capacity, increasing your contributions before April 5th can provide a substantial boost to your retirement savings and reduce your current income tax liability.
Furthermore, it’s worth noting that unused pension allowances from the previous three tax years can sometimes be carried forward, allowing for even larger contributions in the current year. This is known as “carry forward” and can be complex, so seeking advice from accountants Peterborough is recommended to determine your eligibility.
The State Pension is also set to increase by 4.1% from April 6th, 2025, providing a significant income boost for many pensioners in Peterborough. While this is a welcome increase, relying solely on the State Pension may not provide the comfortable retirement you envision. Therefore, maximising private pension contributions remains essential.
Have You Considered Making Financial Gifts?
Making financial gifts can be a way to reduce your potential inheritance tax (IHT) liability. While there is generally no limit on the amount you can gift, large gifts made within seven years of your death may be subject to IHT.
However, there are several exemptions and allowances for gifting:
Annual Exemption: You can gift up to £3,000 per tax year without it being subject to IHT. Any unused portion of this allowance can be carried forward to the following tax year, allowing you to gift up to £6,000 in a single year. This is a simple way for Peterborough residents to make gifts to family members.
Small Gift Exemption: You can make small gifts of up to £250 per person per tax year, provided you haven’t used any other exemption on the same person.
Wedding Gifts: Parents can gift up to £5,000, grandparents up to £2,500, and other relatives or friends up to £1,000 as wedding gifts, which are exempt from IHT.
Gifts from Surplus Income: Regular gifts made from your surplus income, which do not affect your standard of living, are also exempt from IHT. This can be a useful way for Peterborough residents with sufficient income to support family members.
Careful planning and record-keeping of any gifts made are essential. Accountants Peterborough can advise on the IHT implications of your gifting strategy.
Are You Utilising Your Capital Gains Tax (CGT) Allowance?
Capital Gains Tax is payable on the profit you make when you sell or dispose of certain assets, such as shares or a second property. However, each individual has an annual CGT allowance, which is the amount of profit you can make before CGT becomes payable.
For the 2025/2026 tax year, the CGT allowance is £3,000. Peterborough residents who have made capital gains during the current tax year should consider whether they can utilise this allowance before April 5th. For example, if you have investments standing at a gain, you might consider selling them and repurchasing them (known as “bed and breakfasting,” although rules apply to prevent tax avoidance) to use your current year’s allowance. However, it’s crucial to consider the potential impact on your investment strategy and seek advice from accountants Peterborough before taking such action.
If you are married or in a civil partnership, you may be able to transfer assets between yourselves without incurring a CGT charge, potentially allowing you to utilise both your individual allowances.
Have You Considered Your Income Tax Personal Allowance?
Every UK resident has a personal allowance, which is the amount of income you can earn each tax year before you start paying income tax. For the 2025/2026 tax year, the standard personal allowance is £12,570.
Peterborough residents should be aware of how their income levels affect their personal allowance. If your adjusted net income is above £100,000, your personal allowance is reduced by £1 for every £2 of income above this threshold. This means that individuals with an income of £125,140 or more will lose their entire personal allowance.
There are also specific situations where you might be able to increase your personal allowance, such as through the marriage allowance if you are married or in a civil partnership and your partner has unused personal allowance.
Understanding your income tax position and whether you are maximising your personal allowance is crucial for effective tax planning. Accountants Peterborough can provide tailored advice based on your individual circumstances.
Have You Sought Expert Advice from Accountants Peterborough?
Navigating the end of the tax year can be complex, and the information provided here is a general overview. Your individual financial circumstances will determine the most appropriate actions for you to take.
Engaging with professional accountants in Peterborough, such as Gross Klein Wood, can provide invaluable assistance. They can:
- Offer personalised advice based on your specific financial situation and goals.
- Help you understand the implications of different tax rules and allowances.
- Ensure you are claiming all the tax reliefs you are entitled to.
- Assist with tax planning to minimise your liabilities in the current and future tax years.
- Provide guidance on complex areas such as pension carry forward, capital gains tax planning, and inheritance tax mitigation.
Don’t leave your tax planning until the last minute. Contact Gross Klein Wood accountants Peterborough today to ensure you are making the most of the available opportunities before the April 5th deadline. Taking proactive steps now can save you money and contribute to your long-term financial well-being. Remember, some keywords to consider in your discussions with your accountant include ISAs, pensions, capital gains, income tax, and inheritance tax.
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