Tax reliefs and allowances checklist
With tax year end fast-approaching, we’ve pulled together a list of key tax reliefs and allowances it’s important to be aware of:
Current tax year: £11,000
From next tax year: £11,500
If an individual’s total income exceeds £100,000, this allowance is reduced by £1 for every £2 of income above the threshold. Those with total incomes in excess of £122,000 this tax year, or £123,000 from 6th April 2017, will therefore receive no personal allowance.
Capital Gains Tax (CGT) Allowance
Current tax year: £11,100
From next tax year: £11,100
Individual Savings Account (ISA) Allowance
Current tax year: £15,240
From next tax year: £20,000
Junior ISA Allowance
Current tax year: £4,080
From next tax year: £4,128
Tax relief is available at marginal rates of tax on contributions not exceeding the available Annual Allowance.
Annual allowance: £40,000
The Annual Allowance is reduced, or tapered, at a rate of £1 for every £2 of income above an adjusted net income of £150,000. The minimum Tapered Annual Allowance is £10,000 when adjusted net income exceeds £210,000.
Lifetime allowance (LTA): £1 million
Depending on individual circumstances it may be possible to preserve a higher LTA.
Venture Capital Trusts
Allowance: 30% income tax relief up to £200,000
VCTs are higher risk investments, past performance is not a guide to future performance. The value of investments and the income received from them can fall as well as rise. Investors may not get back the amount invested.
Enterprise Investment Schemes
Allowance: 30% income tax relief up to £1million
The relief claim can be carried back to the previous tax year.
Please note that investing into EIS qualifying companies is high risk and is not suitable for everyone. Professional advice should always be sought to ensure you understand all of the risks before you invest. EIS shares are investments in small companies that are generally not publicly traded or freely marketable and therefore may be less liquid (take longer to buy or sell).
Please contact us for any futher information.
These figures are based on current rules and our understanding of what the allowances will be in the next tax year. The Spring Budget announcement will be made on the 8th March and this checklist will be updated if there are any changes.
Statements concerning taxation are based on our understanding of the taxation law in force at the time of publication. The levels and bases of taxation may change. You should obtain professional advice on taxation where appropriate before proceeding with any investment. Readers should seek professional advice for their individual circumstances.
Wealth Planning Director
Jonathan joined in 2016 and is a Wealth Planning Director, providing advice to clients on pension and tax planning issues. Previously he worked at RBC, HSBC, and a privately owned wealth management firm specialising in advice to financial services professionals. Jonathan has 20 years’ experience, is a Fellow of the Personal Finance Society and a Chartered Financial Planner.
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.