At a glance

  • Prioritise tax-efficient savings allowances
  • Top up your pension contribution
  • Plan for Inheritance Tax
  • Maximise your gifts
  • Make the most of your Capital Gains Tax allowances

At a glance

  • Prioritise tax-efficient savings allowances
  • Top up your pension contribution
  • Plan for Inheritance Tax
  • Maximise your gifts
  • Make the most of your Capital Gains Tax allowances

At a glance

  • Prioritise tax-efficient savings allowances
  • Top up your pension contribution
  • Plan for Inheritance Tax
  • Maximise your gifts
  • Make the most of your Capital Gains Tax allowances

Within each tax year, the government gives you a number of tax-free allowances as an incentive to save and invest for your future. There are different limits on these, and you may not be able to carry them forward to future tax years, so it's important to make the most of them within the current tax year (which runs from April 6 for 12 months).

1. Use your ISA allowance

The annual ISA allowance per adult is £20,000 for the 2020/21 tax year. You can’t carry this allowance forward, so you need to make your ISA contribution during or before the end of the tax year.

ISAs are a tax-efficient way to save. You don’t have to pay Income Tax on any income or interest that your savings generate. Nor do you have to pay Capital Gains Tax on any increase in the underlying value of your assets.

Capital gains is the increase in value from the original sum you paid for an asset (such as shares), compared with their increase in value while you have owned them. You can also register a capital loss if their value falls.

If you want to think about how to save money and get ahead with money-saving tips, then using as much as possible of your ISA allowance each year will give your financial future a boost.

2. Use your personal savings allowance

Depending on your tax position, you may also receive a personal savings allowance from the government which enables you to receive up to £1,000 of interest and not have to pay tax on it.

It is worth £1,000 if you are a basic-rate taxpayer, and £500 if you are a higher-rate taxpayer. It is not available to additional-rate taxpayers.

3. Use your dividend allowance

If you own shares in a company – either your own company or a company that is part of the stock market – you can receive up to £2,000 of dividend income without having to pay tax on it.

This is known as your dividend allowance. In addition, you do not pay tax on dividends from shares that you hold within your ISA.

4. Invest for your children’s future with a Junior ISA

You can save up to £9,000 in a Junior ISA for each of your children or grandchildren, up to the age of 18. This is an ideal opportunity for anyone wishing to pass on wealth or help your children or grandchildren save for university or their first home.

Although a Junior ISA must be set up by a parent or legal guardian, friends and other family members can also contribute to the scheme, under which the money cannot be accessed until the child is 18.

5. Save for a first home or for retirement with a Lifetime ISA (LISA)

The LISA is designed to either help people get on the property ladder or boost their retirement savings.

The government will top up what you invest with an additional 25% bonus. In other words, for every £4 you save, the government will add £1.

You have to be over the age of 18 and under 40 to qualify for a LISA. And you are limited to investing a maximum of £4,000 each tax year. (That amount counts towards your overall £20,000 ISA allowance).

St. James's Place do not offer a LISA.

6. Top up your pension contribution

You can contribute up to £40,000 (or up to 100% of your earnings if less) each tax year. You may also be able to carry forward any unused allowances from the previous three tax years.

Making a pension contribution is useful for two reasons – it boosts your retirement savings and it can also reduce your potential tax bill.

There is a limit to the total amount of pension funds you can accrue during your lifetime without incurring a tax charge. These 'tax privileged' pension funds are know as your lifetime allowance – and the standard lifetime allowance for the 2020/21 tax year is £1,073,100.

7. Maximise your charitable gifts

You can give away up to £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate for Inheritance Tax purposes. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year – but only for one year.

8. Make the most of your Capital Gains Tax (CGT) allowance

Capital Gains Tax is a tax on the profit you make when you dispose of (for example, sell or give away as a gift) something that’s increased in value. 

You won't pay CGT on certain assets (including ISAs) – or if all your gains in a year are under your tax-efficient allowance. In the 2020/21 tax year, each adult has a CGT allowance of £12,300.

It's worth remembering that you can report losses on assets (i.e., where shares or other holdings have fallen in value) to reduce your totable taxable gains.

And where you think you are likely to be liable for higher taxation, it may make sense to take gains over two years or transfer assets to a spouse or partner.

9. Build in Inheritance Tax planning

Each adult has an Inheritance Tax allowance of £325,000 which they can pass on tax-efficiently after they die. That means a couple could pass on £650,000 without paying any tax if they write wills leaving their estate to each other.

You can pass a home to your husband, wife or civil partner when you die. There’s no Inheritance Tax to pay if you do this. If you own your home (or a share in it) and your estate is worth less than £2 million, your tax-efficient threshold can increase to £500,000 if you leave it to your children or grandchildren.

That's why will writing is an important part of Inheritance Tax planning.

 

Please note that the figures provided refer to 2020/21 tax year.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

The writing of a Will involves the referral to a service that is separate and distinct to those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority.

Within each tax year, the government gives you a number of tax-free allowances as an incentive to save and invest for your future. There are different limits on these, and you may not be able to carry them forward to future tax years, so it's important to make the most of them within the current tax year (which runs from April 6 for 12 months).

1. Use your ISA allowance

The annual ISA allowance per adult is £20,000 for the 2020/21 tax year. You can’t carry this allowance forward, so you need to make your ISA contribution during or before the end of the tax year.

ISAs are a tax-efficient way to save. You don’t have to pay Income Tax on any income or interest that your savings generate. Nor do you have to pay Capital Gains Tax on any increase in the underlying value of your assets.

Capital gains is the increase in value from the original sum you paid for an asset (such as shares), compared with their increase in value while you have owned them. You can also register a capital loss if their value falls.

If you want to think about how to save money and get ahead with money-saving tips, then using as much as possible of your ISA allowance each year will give your financial future a boost.

2. Use your personal savings allowance

Depending on your tax position, you may also receive a personal savings allowance from the government which enables you to receive up to £1,000 of interest and not have to pay tax on it.

It is worth £1,000 if you are a basic-rate taxpayer, and £500 if you are a higher-rate taxpayer. It is not available to additional-rate taxpayers.

3. Use your dividend allowance

If you own shares in a company – either your own company or a company that is part of the stock market – you can receive up to £2,000 of dividend income without having to pay tax on it.

This is known as your dividend allowance. In addition, you do not pay tax on dividends from shares that you hold within your ISA.

4. Invest for your children’s future with a Junior ISA

You can save up to £9,000 in a Junior ISA for each of your children or grandchildren, up to the age of 18. This is an ideal opportunity for anyone wishing to pass on wealth or help your children or grandchildren save for university or their first home.

Although a Junior ISA must be set up by a parent or legal guardian, friends and other family members can also contribute to the scheme, under which the money cannot be accessed until the child is 18.

5. Save for a first home or for retirement with a Lifetime ISA (LISA)

The LISA is designed to either help people get on the property ladder or boost their retirement savings.

The government will top up what you invest with an additional 25% bonus. In other words, for every £4 you save, the government will add £1.

You have to be over the age of 18 and under 40 to qualify for a LISA. And you are limited to investing a maximum of £4,000 each tax year. (That amount counts towards your overall £20,000 ISA allowance).

St. James's Place do not offer a LISA.

6. Top up your pension contribution

You can contribute up to £40,000 (or up to 100% of your earnings if less) each tax year. You may also be able to carry forward any unused allowances from the previous three tax years.

Making a pension contribution is useful for two reasons – it boosts your retirement savings and it can also reduce your potential tax bill.

There is a limit to the total amount of pension funds you can accrue during your lifetime without incurring a tax charge. These 'tax privileged' pension funds are know as your lifetime allowance – and the standard lifetime allowance for the 2020/21 tax year is £1,073,100.

7. Maximise your charitable gifts

You can give away up to £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate for Inheritance Tax purposes. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year – but only for one year.

8. Make the most of your Capital Gains Tax (CGT) allowance

Capital Gains Tax is a tax on the profit you make when you dispose of (for example, sell or give away as a gift) something that’s increased in value. 

You won't pay CGT on certain assets (including ISAs) – or if all your gains in a year are under your tax-efficient allowance. In the 2020/21 tax year, each adult has a CGT allowance of £12,300.

It's worth remembering that you can report losses on assets (i.e., where shares or other holdings have fallen in value) to reduce your totable taxable gains.

And where you think you are likely to be liable for higher taxation, it may make sense to take gains over two years or transfer assets to a spouse or partner.

9. Build in Inheritance Tax planning

Each adult has an Inheritance Tax allowance of £325,000 which they can pass on tax-efficiently after they die. That means a couple could pass on £650,000 without paying any tax if they write wills leaving their estate to each other.

You can pass a home to your husband, wife or civil partner when you die. There’s no Inheritance Tax to pay if you do this. If you own your home (or a share in it) and your estate is worth less than £2 million, your tax-efficient threshold can increase to £500,000 if you leave it to your children or grandchildren.

That's why will writing is an important part of Inheritance Tax planning.

 

Please note that the figures provided refer to 2020/21 tax year.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

The writing of a Will involves the referral to a service that is separate and distinct to those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority.

Within each tax year, the government gives you a number of tax-free allowances as an incentive to save and invest for your future. There are different limits on these, and you may not be able to carry them forward to future tax years, so it's important to make the most of them within the current tax year (which runs from April 6 for 12 months).

1. Use your ISA allowance

The annual ISA allowance per adult is £20,000 for the 2020/21 tax year. You can’t carry this allowance forward, so you need to make your ISA contribution during or before the end of the tax year.

ISAs are a tax-efficient way to save. You don’t have to pay Income Tax on any income or interest that your savings generate. Nor do you have to pay Capital Gains Tax on any increase in the underlying value of your assets.

Capital gains is the increase in value from the original sum you paid for an asset (such as shares), compared with their increase in value while you have owned them. You can also register a capital loss if their value falls.

If you want to think about how to save money and get ahead with money-saving tips, then using as much as possible of your ISA allowance each year will give your financial future a boost.

2. Use your personal savings allowance

Depending on your tax position, you may also receive a personal savings allowance from the government which enables you to receive up to £1,000 of interest and not have to pay tax on it.

It is worth £1,000 if you are a basic-rate taxpayer, and £500 if you are a higher-rate taxpayer. It is not available to additional-rate taxpayers.

3. Use your dividend allowance

If you own shares in a company – either your own company or a company that is part of the stock market – you can receive up to £2,000 of dividend income without having to pay tax on it.

This is known as your dividend allowance. In addition, you do not pay tax on dividends from shares that you hold within your ISA.

4. Invest for your children’s future with a Junior ISA

You can save up to £9,000 in a Junior ISA for each of your children or grandchildren, up to the age of 18. This is an ideal opportunity for anyone wishing to pass on wealth or help your children or grandchildren save for university or their first home.

Although a Junior ISA must be set up by a parent or legal guardian, friends and other family members can also contribute to the scheme, under which the money cannot be accessed until the child is 18.

5. Save for a first home or for retirement with a Lifetime ISA (LISA)

The LISA is designed to either help people get on the property ladder or boost their retirement savings.

The government will top up what you invest with an additional 25% bonus. In other words, for every £4 you save, the government will add £1.

You have to be over the age of 18 and under 40 to qualify for a LISA. And you are limited to investing a maximum of £4,000 each tax year. (That amount counts towards your overall £20,000 ISA allowance).

St. James's Place do not offer a LISA.

6. Top up your pension contribution

You can contribute up to £40,000 (or up to 100% of your earnings if less) each tax year. You may also be able to carry forward any unused allowances from the previous three tax years.

Making a pension contribution is useful for two reasons – it boosts your retirement savings and it can also reduce your potential tax bill.

There is a limit to the total amount of pension funds you can accrue during your lifetime without incurring a tax charge. These 'tax privileged' pension funds are know as your lifetime allowance – and the standard lifetime allowance for the 2020/21 tax year is £1,073,100.

7. Maximise your charitable gifts

You can give away up to £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate for Inheritance Tax purposes. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year – but only for one year.

8. Make the most of your Capital Gains Tax (CGT) allowance

Capital Gains Tax is a tax on the profit you make when you dispose of (for example, sell or give away as a gift) something that’s increased in value. 

You won't pay CGT on certain assets (including ISAs) – or if all your gains in a year are under your tax-efficient allowance. In the 2020/21 tax year, each adult has a CGT allowance of £12,300.

It's worth remembering that you can report losses on assets (i.e., where shares or other holdings have fallen in value) to reduce your totable taxable gains.

And where you think you are likely to be liable for higher taxation, it may make sense to take gains over two years or transfer assets to a spouse or partner.

9. Build in Inheritance Tax planning

Each adult has an Inheritance Tax allowance of £325,000 which they can pass on tax-efficiently after they die. That means a couple could pass on £650,000 without paying any tax if they write wills leaving their estate to each other.

You can pass a home to your husband, wife or civil partner when you die. There’s no Inheritance Tax to pay if you do this. If you own your home (or a share in it) and your estate is worth less than £2 million, your tax-efficient threshold can increase to £500,000 if you leave it to your children or grandchildren.

That's why will writing is an important part of Inheritance Tax planning.

 

Please note that the figures provided refer to 2020/21 tax year.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

The writing of a Will involves the referral to a service that is separate and distinct to those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority.

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