A New Tax Year Approaches

With the new tax year ending this weekend (April 5), there are a number of important allowances and tax reliefs that will be lost if people do not use them now, although others can be carried over to the 2014-15 tax year.

As far as saving money is concerned, the deadline for paying into an Isa for this tax year is April 5 and once this has passed, any new money paid into one is set against next year’s allowance. The overall limit for an Isa this year is £11,520, of which £5760 can be saved in a cash Isa or the full allowance can be held in a stocks and shares Isa.

There’s just about enough time left to open or top up a 2013-14 Isa but it would be better to do this online or by phone rather than rely on the post and it may be too late for cash. However, most stocks and shares Isa providers will accept applications online or via a call as late as Saturday evening.

If saving into a pension, it should be noted that the annual limit for pension contributions that receive tax relief drops on Sunday from £50,000 to £40,000. However, if the deadline is missed, people have three years to carry forward any unused allowance, although there are qualifying conditions for this, including a requirement to have earned at least the sum they want to pay into the scheme.

Meanwhile, the capital gains tax (CGT) allowance goes up on Sunday from £10,900 to £11,000. However, it should be noted that unused CGT allowance cannot be carried forward, although capital losses made in the year can be set against future capital gains.

Finally, another allowance that can be carried forward is the £3,000 tax-free annual limit on gifts for inheritance tax (IHT), so anyone who has made gifts of less than this this tax year can add the remainder to their 2014-15 allowance. It might help prove to the taxman that these amounts really are gifts if they are accompanied by a signed and dated declaration to the recipient stating that they are made out of love or affection.