5 Tips to Get the Best Tax Deal in 2021/2022

As the Covid restrictions are gradually lifted, normality is starting to appear on the horizon.

4th June 2021

As the Covid restrictions are gradually lifted, normality is starting to appear on the horizon.

Throughout 2020 it was difficult to make plans for next week, let alone the rest of your life. But the new tax year, and the prevailing optimism, mean it is a great time to start planning and catch up on missed opportunities.

There are a number of ways that you can make your financial plan more tax efficient. The earlier you start planning, the more you can benefit.

So once you have celebrated and hugged your loved ones, why not make some plans to get the 2021/2022 tax year off to a good start.

Structure Your Income Efficiently
Everyone has a tax-free personal allowance of £12,570 per year, although this is reduced for anyone earning over £100,000. But there are several ways to make the most of your tax-free income, or even increase it. For example:

Use Your ISA Allowance
You can contribute up to £20,000 per year to an ISA. All income and growth is free of tax, and you can withdraw your money at any time without tax or penalty. Depending on your circumstances, you may wish to contribute to a Cash ISA, Stocks and Shares ISA or even a Lifetime ISA.

If you don’t use your ISA allowance in a given tax year, you can’t carry it forward to the next year.

Regular, monthly contributions are the best way to use your ISA allowance, for the following reasons:

Make Pension Contributions
Pensions are one of the most tax-efficient ways to save for the future, but many investors are not fully aware of the tax treatment. Early planning not only helps you take advantage of the benefits, it also ensures that you don’t fall into certain tax traps.

Here are some ways in which you can make the most of your pension:

Use Your Capital Gains Exemption
If you sell any investments, other than those held within an ISA or pension, capital gains tax may be due on any profits. While this may be unavoidable, there are a few ways to minimise your liability:

Other Tax Savings
There are a few other options for saving on tax, either directly or indirectly, which many people are not aware of.
For example:

By combining different strategies for saving tax, you could save thousands each year without any major changes to your lifestyle.

Please don’t hesitate to contact a member of the team if you would like to find out more about your options for saving tax.

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