With the tax year ending on April 5, it’s important to make sure you’ve got your ducks in a row – otherwise you could be missing out on huge tax-efficient opportunities. It doesn’t matter if you have a spare £100 or £10,000 – there are things you should be doing right now to make your money work harder for you!
Your Individual Savings Account (ISA) annual allowance is £20,000 – and it doesn’t roll over to the next tax year. If you haven’t maxed out your limit this year, or have spare savings in a normal savings account, it’s time to transfer cash into your ISA.
The personal allowance is use-it-or-lose-it, so make sure you move money across before 5th April as it resets on the 6th. Remember: transfer between ISAs instead of withdrawing and paying back in, because this could count against your personal allowance.
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If you have already used your maximum allowance, or have a standard savings account set aside for your child’s future, you’re missing out on a tax-efficient way to save for their future. Every child is entitled to a Junior ISA with a personal allowance up to £9000 a year.
The money you pay into their ISA becomes theirs – you can’t claim it back from them at a later date. However, if you want to gift your child a lump sum on their 18th birthday to help with a university fund or house deposit, it’s the perfect way to set them up for a financially secure launch into adulthood. They take control of the account age 16 but can’t withdraw money until they turn 18.
You can support family with financial gifts – whatever their age. Every year, there are certain allowances that mean you can give money to your loved ones and it won’t be counted in Inheritance Tax assessments if you pass away within seven years of the gift.
You can give up to £3000 a year or individual gifts of £250, and if you didn’t do it last year you can roll that allowance forward. There are also opportunities for one-off gifts for weddings, too. You can give £5000 for a child, £2,500 for a grandchild or £1000 to any person for their wedding or civil partnership. This is in addition to the annual £3000 gift allowance.
If you want to give regular payments, you can do this tax-free, too. You have to be able to afford your usual living costs and pay it from your regular income for it to qualify – but it can be a way to support adult children financially in the long-term. Paying into a Junior ISA falls into this category.
You’re allowed £500 of dividends from your shares every tax year before you’re taxed. The tax rate on anything above that £500 depends on your usual income tax rate – so it’s 8.97% if you’re a basic tax rate payer, 33.75% as a higher rate payer, and 39.35% as an additional rate payer.
So, make sure you claim your £500 before April 5th to ensure you make the most of this allowance. You can claim the next £500 any time in the following tax year – so you could draw £1000 in the same month as long as £500 is before 5th April and £500 is after that date.
In April 2025, the rules change when it comes to topping up your National Insurance contributions. If you have missing or reduced contribution years, this will impact how much State Pension you’re entitled to receive when you’re old enough to draw on it.
Currently, you can fill gaps by topping up contributions as far back as 2006. But be quick: this changes in April to only being claimed as far back as six years prior to the claim date. There is an anticipated backlog of people contacting DWP in the hurry to log their claim in time, which is why the rules have been slightly relaxed on the deadline: as long as you fill in a callback form before April, you will be able to discuss topping up as far back as 2006.
Visit https://bit.ly/NICallback to fill out the form as soon as possible to get in the queue. Check your National Insurance record and State Pension forecast while you’re at it, too!
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