ISA (Individual Savings Account ) made up from scrabble tiles

New improved ISA

Good news. The new ISA limits announced in the last budget are now available.

With effect from 1 July 2014 the previous ISA limit (£11,520) has been significantly increased to £15,000.  Furthermore the 50% cash ISA limit of £5,760 has been abolished so that any combination of cash and stocks and shares can be held within the ISA wrapper up to the overall £15,000 limit. These products will be termed “New ISAs” or NISAs.

The Junior ISA limit has increased to £4,000.

 

Bundle of £20 notes wrapped with red ribbon

Make gifts to save tax before April 5th

If you are a higher rate taxpayer consider making charitable payments under Gift Aid so that you obtain additional tax relief. The charity will also be able to reclaim the basic rate tax from HMRC. Note also that Gift Aid can be carried back for relief in the previous tax year (so useful if you were a higher tax payer in 2012-13).

Have you made use of your annual Inheritance Tax exemptions? The general annual exemption is £3,000 per donor (plus last year’s £3,000 exemption if you did not use it). Also consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT.

Arrange a free consultation to discuss this and other tax saving ideas.

Money box with key labelled Pension Fund

Maximise your Pension contributions before 5th April

Making pension contributions before the end of this tax year can help mitigate your tax liability. Such contributions attract tax relief at your highest marginal rate, be that 20%, 40% or 50%.

This form of tax planning has become even more appealing with the announcement in this weeks budget of plans to make it easier to take benefits in retirement. It may no longer be necessary to purchase an annuity, or suffer punitive tax for income drawdown.

Take advantage of the pension carry forward rules in order to benefit from any unused allowances from the previous three tax years. This is generally the difference between the annual contribution limit (currently £50,000) and the pension input each year and can be added to your relief for 2013/14. Note that the annual pension allowance reduces to £40,000 from 6 April 2014.

Contact us if you require guidance on end of tax year planning.

High Income Child Benefit charge

You may be liable to the High Income Child Benefit charge if you, or your partner, have an individual income of more than £50,000 and one of you gets Child Benefit. It may also apply if someone else receives Child Benefit for a child who lives with you.

The new rules came into effect 7th January 2013, unusually part-way through the tax year. The option facing affected households was either to stop claiming the benefit from that date, otherwise to make a repayment of it based on a sliding scale.

An estimated 120,000 middle-class parents could be facing fines of £100 because they have so far failed to register for self-assessment and repay the benefit. Penalties can rise to £1600 for those who file more than a year late.

Find out if you’re liable, what this means and what you need to do go to https://www.hmrc.gov.uk/childbenefitcharge/

Contact us if you require help with your tax return.