Partner Article

End of the tax year: Client FAQs

With the countdown to the end of the tax year upon us, here are five tips that my colleagues and I at Barclays Wealth & Investment Management are discussing with clients to help them make the most of the options available to them to maximize their savings:

• Make the most of the ISA annual allowances. The 2015/16 limit is £15,240 and that can be used to invest in cash, investments or a mixture of both – and don’t forget children (under the age of 18) can save up to £4,080 in the current tax year with a Junior ISA. We’ll be talking to our clients to make sure they are making the most of this for themselves and for their children.
• Think about Capital Gains Tax (CGT) allowance. Another thing to remember is the potential benefits of disposing of assets to make use of this tax year’s CGT allowance (£11,100 for 2015/16) if this has not been used up already, and of course, always in the context of wider investment considerations and longer term planning.
• Consider spousal transfers. We’ll also be talking about the possibility of transferring assets with built-in gains to a spouse or civil partner if there are unused capital losses or an unused CGT annual allowance. Transferred assets cannot be reclaimed. In relation to Inheritance Tax Planning there is also the possibility to make use of the annual exemption for gifts up to £3,000 each year, which can also be ‘carried back’ one year, if not used in the previous tax year.
• Use personal allowances. Married couples and civil partners can transfer income-producing assets outright to their spouse to make maximum use of their various personal allowance and lower rate tax bands (if they haven’t used them up already). However – the impact and benefits of this depend on the individual circumstances of each spouse. Careful planning is needed here to assess this and ensure the gift is effective and the transferring partner must accept that the transfer is irrevocable.
• Maximise pension contribution. Pensions are always an important part of conversations we have with clients at this time of year. The standard tax-free annual allowance (AA) for 2015/16 is £40,000; however, this may be different if the client has decided to take advantage of the new rules around flexible access to pension funds, so it is important to understand which AA applies. This can also be topped up by using any unused pension allowances from the previous three years if pension arrangements existed in those years. It’s worth bearing in mind that the standard Lifetime Allowance, which is broadly the maximum size a pension pot can grow to without a tax implication, will be reduced from £1.25m to £1m from 6 April 2016. Any funds accrued in pensions above this limit, could incur a tax charge of up to 55% when crystallised.

This was posted in Bdaily's Members' News section by Anthony Ward .