As we approach the end of the 2021/22 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 2021/22 is £20,000 and if you have not made a subscription (or perhaps you have only made a part 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Since 6th April 2016, in addition to the subscription, it has been possible to top-up ISAs by any amounts withdrawn during the tax-year, including any charges deducted.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 2022.
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 deduct ISA charges from the cash held in your Portfolio and not from the ISA itself.
If you have a Transact Wrap Account and you would like to know your personal ISA allowance for the remainder of the 2021/22 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 2022/23 is likely to remain £20,000 each, so £40,000 per couple.
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 £12,300 before CGT becomes payable.
Income Tax rates of course, are 20%,40% and 45%, so quite a bit higher than taxes on capital gains!
It might be sensible to at least consider using this year’s CGT allowance before the end of the Tax Year. If you do wish to look into this, please do 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 be contacting you individually over the course of 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
