How Can Using Tax Allowances Help Strengthen Your Financial Future?

By WARREN HADLOW, Director of Hadlow Edwards Wealth Management Ltd

With so many other aspects of our lives changing on an almost daily basis, it’s good to know that you can do something practical to help your short- and long-term financial wellbeing.

Making the most of your personal allowances before each tax-year end can help strengthen your financial future. Here are the main allowances that you could make the most of:

ISA allowance for 2022/23: £20,000

Put away as much as you can afford, and you won’t pay Income Tax or Capital Gains Tax on the interest you earn. You can also contribute up to £9,000 to a Junior ISA for your children and grandchildren which could get them off to a great start in their adult life.

Pension allowance for 2022/23: £40,000 or 100% of your earned income (whichever is lower)

Thinking about retirement at a young age can be put on the back burner but making use of the pensions allowances sooner rather than later can have a big impact later in life. You can also carry forward unused allowances from three previous tax years.

Gifting allowance for 2022/2023: £3,000

Gifting money to loved ones each year can reduce the overall value of your estate when it comes to calculating Inheritance Tax (IHT). And you can carry over unused last tax year’s allowance too, meaning you can give away up to £6,000. You could even give away more, as the amount becomes IHT exempt if you survive for seven years.

Capital Gains Tax (CGT) allowance for 2022/23: £12,300

If you are planning on selling investments or assets, the CGT allowance is how much you can make before you start paying tax. In the 2023/24 tax year, this allowance drops to £6,000.

If you would like to know which personal allowances are available and relevant to you, get in contact and we can help you strengthen your finances for the future.

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

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

By Warren Hadlow of Hadlow Edwards Wealth Management Limited

hadlow.edwards@sjpp.co.uk

Tel: 01978 311 611 www.hadlowedwards.co.uk