Money Matters

NEW TAX YEAR-NEW OPPORTUNITIES

I assume that most of you are working from home at the moment and heeding government advice.

If you have spare time on your hands, it would be a good idea to look at and hopefully take advantage of the current tax breaks.

1.ISA Allowance - Everyone has a £20,000 allowance for tax year 2020/21. All growth in the ISA will be tax free. You can even put up to £9000 into a Junior ISA for this tax year.

2.Capital Gains Allowance - Any asset sold in 2020/ 21will have an exempt allowance of £12,300.

3.Inheritance Tax - Everybody has a nil rate band of £325,000 and a residential nil rate band of £175,000. For couples with a suitable will, their inheritors will not pay any inheritance tax on the first £1 million.

4.Income Tax - Everyone can earn £12,500 before paying tax. This includes earnings, pensions etc.

5.Marriage Allowance - Married couples in certain circumstances can transfer 10% of their personal allowance to their partner.

6.Pensions - If you pay tax at 40% then any pension contribution will attract tax relief at 40% i.e. if you put £60 into a pension fund then the government will add another £40, giving you an instant 67% return.

Even for a basic taxpayer the government will add £12.50 for every £50 you contribute, a return of 25%. Nowhere else can you get a guaranteed return at this level.

If you are unsure in any way about these reliefs or investments, you should consult an Independent Financial Adviser.

The Money Matters column is contributed by Personal Money Matters. This month’s column by Dr Peter M Marshall.