Nicholls Stevens Financial Services

Getting your fair share of tax reliefs

The Treasury is no doubt about to extract a little more tax from each one of us this year, so we should all make sure we are making use of any tax incentives which are available as early in the tax year as possible

ISA

 We can now all make a further ISA contribution: £5,100 into a CASH ISA and the same amount into Stocks and Shares, or a total of £10,200 into a Stocks and Shares ISA. I strongly recommend that cautious investors should make sure that they have maximised their Cash ISA allowance and do this every year. The ideal is to have 100% of your emergency Building Society monies held in a Cash ISA

If you are prepared to take some risk, similarly you should be maximising your annual Stocks and Shares ISA allowance. If you want income I recommend using Corporate Bond funds because the interest is not taxed (the 10% tax on dividends cannot be reclaimed even in an ISA) and using the equity funds for growth, because the gain will not be subject to capital gains tax.

Make these contributions now and enjoy the tax free income or growth for an additional 11 months

Pension Contributions

Many clients leave it until the end of the tax year to make a pension contribution, if you have the available funds, why not make the contribution now, that means that your money and the tax relief will be invested for an additional 11 months

Making sure you are in receipt of the full Personal Allowance

If your gross taxable income is likely to be over £100,000 you will lose anything between a part and 100% of the personal allowance in the current tax year. If your total income is likely to be marginally over this amount, you can reduce it by making a pension contribution(see above) or a gift to charity (Charity Aid Donation). Why not make these contributions now because as I have outlined the pension contribution will be invested for a longer period and I am sure that the charity of your choice would be glad of the donation as soon as possible, particularly as charitable giving has been badly hit in the recession

Income withdrawals from Insurance Bonds

Many clients are sitting on Insurance Bonds. These bonds have a unique feature,; the ability to withdraw up to 5% of the original investment each year and not pay any immediate tax (it is taken into account with the final calculation when the whole bond is cashed in). Many clients do not take these withdrawals and it can be a tax efficient exercise.

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