The new tax year – act now to maximise your allowances

The last few weeks of a tax year are inevitably spent desperately ensuring you are using all your available tax allowances before the deadline hits. However, as Gary Smith, chartered financial planner at Tilney, states below, there is plenty you could be doing right now to ensure you are not caught in a last minute scramble.

“It is obviously very important leading up to tax year end that you make the most of the allowances that are available to you before it is too late. But there are many things you could be doing throughout the year to maximise your allowances and ensure you are not caught short.

“As I have previously stated, the chancellor will be looking to raise revenue from somewhere following his embarrassing backtrack on the national Insurance changes. I would therefore highly recommend people maximise their pension funding 0 including making the most of carry forward and annual allowances – early in the new tax year rather than wait until March 2018 as we don’t know if any potential changes could be announced in the Autumn Budget. It is unlikely that the chancellor would partition a tax-year, but in the current environment, you never know!

“This is also the first tax year when savers will be able to contribute £20,000 tax-free into an Isa. Rather than funding this as a lump sum, you might be better off funding this allowance through regular premiums to reduce the impact of market volatility during the next 12-month period. There are elections in Europe, Brexit negotiations and President Trump’s administration – all of which will have an impact.

“The Lifetime Isa will now also be available. While it is somewhat controversial, and will not initially be widely available, it will help first time buyers who are looking to get on the property ladder in the next few years, and is a useful tool for parents or grandparents wanting to help the younger generation with a house purchase.

“For those with a home and an IHT liability, it would probably be a good time to review will to ensure they make the best use of the residence nil rate band. They should also consider using the annual IHT exemption of £3,000.

"I’ve no doubt that many will find themselves in the usual last minute dash at the end of this tax year as they have in the last couple of weeks, but with so many allowances to take advantage of, it really is prudent to act now to ensure you truly make the most of them. If you are in any way unclear what options and allowances are available to you, you should speak to a financial planner.”

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