Tax breaks aren’t just for the rich! If you’re saving for a deposit, putting money by for your kids, or building funds for retirement, there are ways to make it more tax-efficient.
And, if you do it before the 2023/24 tax year ends in April, you could save now, then save again in the new tax tear!
Making the most of your finances – both now and for the future – is so important, and by using Beewise you’re guaranteed outstanding customer service as well as expert advice.
Get in touch with Beewise to speak to your local financial planning expert for tailored advice, or read on to find out how you could make savings.
Get your savings working for you
One of the first steps to successful investing is checking any savings are as tax efficient as possible.
In the current tax year (6th April 2023 to 5th April 24) you can save £20,000 tax-free within an ISA – an Individual Savings Account.
There are 3 different types of ISA:
Cash ISA – money kept in these is protected. If you need it, you can take the money out, immediately if you choose an instant access account.
Stocks and shares ISA* – allows you to invest your money in the stock market with any investment growth or interest earnt being tax efficient.
Lifetime ISAs** – these can be ideal for first time buyers, as they let you save up to £4,000 every tax year towards a first home or your retirement.
The government pay a 25% bonus on top of your savings, so you could bag £1,000 free cash per year. Plus, you earn tax-efficient interest on whatever you save.
But, you need to have had a LISA open and with money deposited in it for a year to be able to use the funds towards your first home.
You can save up to £20,000 tax efficiently across all three this tax year. For more on their benefits, and which is right for you, email your local Beewise financial advisor or call 01934 204841.
Junior ISAs, designed for children under 18, also offer tax benefits and investment opportunities, with a generous limit of £9,000 in the 2023/24 tax year.
Whether you want to set aside money for your children’s education, help them onto the property ladder, or buy their first car, Junior ISAs are a great way to start saving for them.
5th April 2024 is the cut-off for the 2023/24 tax year, so make sure to use your full allowance before it’s too late!
Make the most of your tax allowances
Each year the government provide allowances and reliefs in different areas for all taxpayers.
Most people are aware they have a personal allowance – an amount you can earn each year before you start paying tax. For this tax year, 2023/24, it’s £12,570.
Your personal allowance can also be used against your state pension, income you’re drawing down from private pension arrangements, and other investments or cash savings liable to income tax.
But, did you know there are also allowances for pension savings, pension contributions, dividends, savings income and more?
Your local Beewise financial advisor can check you’re making the most of these, both in this tax year and from April onwards.
For example, making pension contributions or charitable donations could reduce your tax liability.
Or, if you’re a higher or additional rate taxpayer, there could be tax planning opportunities that bring you into a lower bracket and save you money.
Because tax treatment varies according to individual circumstances and is subject to change, give us a call on 01934 204841 or email us to discuss further.
Consider future inheritance tax
If the total value of your savings, property and investments are over £325,000, these assets could be liable for inheritance tax – a tax on your estate after you die.
When calculating inheritance tax, any liabilities, exemptions and reliefs are deducted from the value of the estate first, and assets left to a spouse, civil partner or charity are usually exempt.
You can also give away up to £3,000 during the 2023/24 tax year, which will then fall outside your estate for inheritance tax purposes.
If the £3,000 exemption was unused in the previous tax year, this could also be carried forward, so the maximum available exemption could be up to £6,000.
A married couple could therefore gift up to £12,000 in a single tax year with no inheritance tax implications – worth considering if you think you could be affected.
Again, we’d always recommend speaking to a Beewise advisor first to ensure you’re making the most suitable decision for your finances.
If your estate is worth over £325,000, your Beewise financial adviser can also discuss other ways to mitigate any inheritance tax payable on death, such as the use of trusts or life cover.
To get in touch, click here or call 01934 204841. We offer evening and weekend appointments to fit with your lifestyle, plus face-to-face appointments or video calls to suit you.
Looking for more expert advice? Check out these other helpful blog posts!
Beewise FS Ltd also have a team of mortgage and personal insurance specialists to help save you time, money and stress in these areas too.
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Please note, the value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
Inheritance Tax Planning, Estate Planning and Trusts are not regulated by the Financial Conduct Authority.
*For ISAs, investors do not pay any personal tax on income or gains but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA manager. Tax treatment varies according to individual circumstances and is subject to change. Stocks and Shares ISAs invest in Corporate bonds – stocks and shares and other assets that fluctuate in value.
**You will incur a Lifetime ISA government withdrawal charge (currently 25%) if you transfer the funds to a different ISA or withdraw the funds before age 60 and you may therefore get back less than you paid into a lifetime ISA.
By saving in a lifetime ISA instead of enrolling in, or contributing to an auto-enrolment pension scheme, occupational pension scheme, or personal pension scheme: (i) you may lose the benefit of contributions from your employer (if any) to that scheme; and (ii) your current and future entitlement to means tested benefits (if any) may be affected.