Your new tax year checklist

Business Insights

Are you ready for the new tax year? Find out how to make sure your savings and investments are as tax efficient as possible by using the available allowances.

All of us in the UK are subject to the same calendar tax year that runs from 6 April to 5 April the following year. On 6 April, all tax-free investment allowances are reset. Using tax allowances will help your short and long-term financial security and wellbeing.

What is the annual allowance for an ISA?

Every tax year you are allowed to put £20,000 into your ISAs. So, whether you are investing in a stocks & shares ISA, a Lifetime ISA, a cash ISA, or an innovative finance ISA, you have £20,000 to invest for that tax year without paying tax on the growth of those contributions.

You may invest in one of each different respective ISA per year but your cumulative investments in ISAs must not be above £20,000.

What is the annual allowance for a Junior ISA?

In this tax year, up to £9,000 can be contributed for each child by parents, grandparents, family members and friends. This does not affect your £20,000 ISA allowance as the money belongs to the child in whose name the Junior ISA has been set up.

Junior ISAs are a great way to put money away for a child's future. Gifting money in this way is also a great opportunity for those with estate planning needs who want to see their wealth passed on effectively to younger generations.

What is the annual allowance for a pension?

For the 2024/2025 tax year the annual allowance is £60,000 for most people. The annual allowance applies across all your pension savings, not per scheme. Contributions above this amount will not get tax relief.

There are, however, a few stipulations to bear in mind. For example, your yearly allowance is capped at your yearly salary. If you earn £30,000, this is the most you can contribute in one tax year.

What about the Lifetime Allowance and tax-free cash?

The government has capped the pension tax-free lump sum at £268,275 – or 25% of your actual pension pot, whichever is lower. Which means that the most you can ever draw down, tax-free, from your pension is £268,275 (unless you had applied for Lifetime Allowance Protection under previous rules). After that, anything you take from your pension will be subject to Income Tax at your marginal rates.

The Lifetime Allowance Tax Charge has now been abolished, so some people who had stopped contributing may now have the option to do so again, helping build up their Pension for future use, or to act as an Estate Planning vehicle (Pensions are outside of your Estate, and not subject to Inheritance Tax).

What is the annual allowance for a general investment account?

For a general investment account (GIA), there is no tax-free allowance. The GIA is most used by those who have used their £20,000 ISA allowance for the tax year first.

Once you've reached your ISA limit for the tax year then a GIA is a good way to invest beyond that, though your GIA returns may then be taxed.

What is the annual allowance for Capital Gains?

The last two tax years have seen the tax-free allowance for Capital Gains Tax (CGT), reduce from £12,300 to £6,000.

The CGT allowance, which is the amount you can make before you start paying tax, drops to £3,000 from this April.

What is the annual personal savings allowance?

Through the Personal Savings Allowance, basic-rate taxpayers can continue to earn £1,000 interest on savings before paying tax in 2024/25. For higher-rate taxpayers, the allowance stays at £500, and for additional-rate taxpayers, it's zero.

Get in touch.

If you have any questions on any of the information above, please do get in touch.

Freddie Cleworth, Chartered Wealth Manager, EQ Investors