As we approach the end of the 2023/24 tax year, thoughts inevitably turn to end-of-year tax planning and any unused allowances (ISA, Pensions, etc.) that may be available.
The ISA allowance for 2023/24 is £20,000, and if you have not made a subscription (or perhaps you have only made a partial subscription), there is still time to use this allowance if you have the funds available.
Since 6th April 2016, in addition to the subscription, it has been possible to top-up ISAs with any amounts withdrawn during the tax year, including any charges deducted. This means that even if you have not made a subscription this year but have ISAs from previous years, your personal ISA Allowance may be more than £20,000 because of charges deducted during the year. If you made a subscription at the beginning of the tax year, you may still have a residual allowance left because of these deductions, which can be utilised by 5th April 2024.
If you have a Standard Life Wrap Account, the scope for top-up (in addition to any unused subscription) does not apply unless you take physical withdrawals from your ISA. This is because Standard Life deducts ISA charges from the cash held in your Portfolio, not the ISA itself.
If you have a Transact Wrap Account and want to know your personal ISA allowance for the remainder of the 2023/24 tax year, you can access this information on the Transact website. From your home page, select reports, and from the drop-down menu, select ISA Subscriptions.
If you would like to use the balance of your allowance before 5th April, please ensure you advise us of your intentions before the end of March; we will be very pleased to assist.
Just for information, the ISA Allowance for 2024/25 is likely to remain £20,000 each, so £40,000 per couple. However, there is a Budget on 6th March, so this could change.
Capital Gains Tax (CGT)
Currently, rates for CGT are 10% for Basic Rate Taxpayers and 20% for Higher Rate Taxpayers; where property assets are concerned (excluding the main residence), the rates are 18% and 28%, respectively. There is an allowance each year (currently) of £6,000 before CGT becomes payable. You may recall that in Jeremy Hunt’s emergency Budget when he took over as Chancellor, he announced that CGT allowances would be reduced further to just £3,000 in 2024/25.
Income tax rates, of course, are 20%,40%, and 45%, so they are quite a bit higher than taxes on capital gains!
It might be sensible to consider using this year’s CGT allowance before the end of the tax year. If you wish to look into this, please let us know, and we will try to assist.
If you have a General Investment Account (GIA) with us worth more than £250k, we will contact you individually over the next couple of weeks or so.
Many of our clients will not need to take any action, as most assets are held within ISAs and Pensions, where CGT does not apply.
As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to get in touch.
Yours sincerely
Graham Ponting CFP Chartered MCSI
Managing Partner
