The end of the tax year is fast approaching and time is running out to make sure your money is working as hard as possible for you. Here’s how you can cut your tax bill and give your finances a boost before 6 April – the first day of the new tax year.
1. Use up your ISA allowance
Don’t waste your ‘use it or lose it’ tax-free ISA allowance, which resets at the end of the tax year. UK residents aged 18 or above can invest up to £20,000 in two types of ISA – either a Cash ISA or a Stocks and Shares ISA – or split the allowance between the two.
‘If you have spare cash and you haven’t used your full ISA allowance, do pay it in,’ recommends financial coach Emma Maslin (themoneywhisperer.co.uk). ‘Children get their own allowance too (this year, it’s £4,368) so if you’re saving for kids it makes financial sense to take out a Junior ISA. Once children reach the age of 16, they can manage their own Junior ISAs but they are also eligible for an adult ISA – so for a small window, you can actually have both.’
2. Maximise your pension
Pensions are linked to the tax year, so consider boosting your pension contributions before 6 April. ‘Everyone has an annual pension allowance and if you’re a basic rate taxpayer that’s £40,000 a year,’ says Emma Maslin. ‘Request a statement from your provider to see what your contributions have been over the year so far – and if you’ve got extra money, put it in. It’s one of the best ways to save money for the future because you’re getting instant tax relief.’
It’s also possible to pay into a pension for a non-earning spouse, or child too. For example, you can pay up to £3,600 per annum into a spouse’s pension if they are not working, but this will only cost you £2,880 as they effectively reclaim the tax for you.
3. Plan your self assessment tax return
It’s never too early in the year to think about filing your Self Assessment tax return. Registration and retrieving all-important log-in codes Her Majesty’s Revenue and Customs (HMRC) can take time, and millions of people are hit by fines every year for late filing. By beginning the process now, you can stay on top of your money and ensure you get your tax return filed in plenty of time.
4. Carry out a financial health check
‘The end of the tax year is a good opportunity to look at your financial situation as a whole,’ says Maslin. ‘Is your will up to date? Have you had any major life changes? Does your partner know where all your paperwork is? Have you had any changes that might mean a review of your insurance situation?’ She also recommends using the end of the tax year as an opportunity to evaluate longer term financial goals. ‘Check where you are in terms of pension provision and think about longer term aims like purchasing a property. It’s the perfect time to evaluate what steps you need to take to improve your position in the new tax year.’
5. Invest for your whole family
If you haven’t taken out an ISA or a Junior ISA this year and want to get ahead with your family’s savings, there’s still time. To give your kids a head start with their savings, open an ISA with us, and a new VitalityInvest Junior ISA before 5 April 2020 and you could pay no product charge on your child’s Junior ISA for the next tax year and future tax years. Have a look here for more information.
Capital at risk. Terms and conditions apply.