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Get prepared for tax year end 2023

Planning & protection

20 January 2023

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Lauren Herrick

With the personal tax year coming to an end on 5 April, now is the time you should be working with your financial adviser to ensure you have utilised your tax allowances and exceptions.

There are several ways you can ensure your finances are in the best position; from individual savings accounts (ISAs) and capital gains tax allowances to pension contributions and gifts.

Over the coming months we’ll be spotlighting each of these areas to support you in making the most of your allowances.

This month independent financial adviser Lauren Herrick focusses on the added value ISAs can bring to your portfolio.

 

Utilising your allowances

Individual Savings Accounts (ISAs)

Usually, you have to pay tax on any income or capital gains you earn from your investments; however, with an ISA, provided you stay within the pay-in limits, capital gains and income made from your investments won’t be taxed.

So, it’s worth making sure you use your full ISA allowance of £20,000 for the 2022/23 tax year. You can put the entire amount into a Cash ISA, a Stocks & Shares ISA, an Innovative Finance ISA, or any combination of the three.

 

Using your partner’s ISA allowance

If you’re married or in a civil partnership you shouldn’t just think about your own ISA allowance.

Each adult has an ISA allowance of £20,000 each year, and there can be tax advantages to viewing yours and your spouse’s allowances together.

Download our ISA guide

 

Taking action

Topping up

If you already have an ISA you can consider topping it up before the end of the tax year so long as you stick within the annual limits. The ISA allowance is a use-it-or-lose-it arrangement for each tax year – you can’t go back and make use of unused allowances from previous tax years.

 

Bed and ISA

As we approach the end of the tax year it is always worth considering moving existing investments into a tax efficient wrapper.

While the name Bed and ISA might seem like an obscure expression, the idea is simple. You sell investments that you’re holding outside an ISA and then buy the same investments back within your ISA.

In effect, your investment goes to bed as a taxable fund and wakes up the next morning in a tax efficient ISA wrapper, making full use of your allowances while also shielding you from any future Capital Gains Tax (CGT) liability.

This tactic is particularly useful when investments have significantly increased in value, resulting in a capital gain.

A Fairstone adviser can support you in assessing if this is the best approach for you and your circumstances.

Match me to an adviser

 

Contribute up to £9,000 into your child’s Junior ISA

You can also consider a Junior ISA fund, which builds up, free from tax on investment income and capital gains, until your child reaches age 18. At that point, the funds can either be withdrawn or rolled over into an adult ISA.

Relatives and friends can also contribute to your child’s Junior ISA, so long as you don’t go above the £9,000 limit for 2022/23.

 

Get ready for tax year end

No one likes to miss out, and as the tax year end approaches, you’ll want to ensure you’re making the most of your allowances and putting yourself in the best position for the new tax year.

Find out how you can make the most of your tax allowances and exemptions by watching our virtual event at a time that suits you.

Register your place here

 

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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