5 Things to do before the end of the UK financial year 

The end of the financial year is fast approaching in the UK, providing the perfect opportunity to review your finances and make the most of those annual tax and savings allowances. We’ve put together a list of 5 things you should act on before April the 5th to help put you in a good financial position for the coming tax year. 

Use your capital gains tax allowance 

Capital gains tax is paid when you make money from the sale of assets such as shares, investments, valuables, second properties and businesses. The amount of tax you pay depends on your tax paying status (basic, higher or additional) and varies between 10 – 28%. 

The capital gains tax allowance is £12,300 for 2021 to 2022, meaning that any money you make from capital gain sales will not be liable to taxation if it is under this amount. This allowance, however, cannot be carried forward into the next year, so if you are considering selling assets that might amount to more than the allowance amount, ensure you make the most of your allowance this year before April 5th.  

Use your ISA allowance 

Investing money in an ISA (Individual Savings Account) is a great way to invest your money tax-efficiently. There are five types:

• Cash ISAs
• Stocks and Shares ISAs
• LIfetime ISAs*
• Innovative Finance ISAs**
• Junior ISAs

You can have more than one ISA in your name, but the annual ISA allowance applies to all your ISA accounts, not just one. The allowance from 2021 to 2022 is £20,000 (£9000 for a Junior ISA). This means you can invest up to this amount across your ISA accounts without paying any tax on the interest earned, whereas with a savings account you will have to pay tax on any interest earned over £1000 – or even less, depending on your tax bracket. To ensure you are getting the most out of your savings, double check you’ve moved what you can from your regular savings account into your ISA (up to £20,000) for better long-term returns. 

*these carry a 25% government withdrawal charge if accessed before the age of 60 unless it’s for a first home purchase

**these are not covered by the Financial Services Compensation Scheme (FSCS)

Use up your pension allowance 

Similarly to your ISA allowance, you are able to contribute a certain amount to your pension each year before you are liable to pay tax. For the vast majority, this allowance is capped at £40,000, but for some (those who have high income or access their pension flexibly) it might be less. If you are in a position where you want to and are able to contribute more to your pension, check how much you have already contributed this year and try to make any additional contributions before the 5th if you have not maxed out your allowance already. If you have, you might be able to carry over some remaining allowance from the previous three years. 

Take a look at your will

Although this does not have to be done at the end of the financial year, reviewing your will on an annual basis is a good idea and it makes sense to do it at a time when you might be taking a look at the rest of your finances. Circumstances change, and you may wish to alter the distribution of your estate after your death or ensure that the details are all accurate and up to date. 

Review your finances as a whole 

The end of the financial year is an excellent time to take stock of your financial standing and assess any next steps or actions that need to be taken. It can help with budgeting, investments and retirement planning. Taking a look at your spending habits and projected savings is crucial to ensure you are on track for a stable financial future and for creating realistic financial goals. 

A list of some things you can assess are:

• Investments and savings. 
• Outstanding debt. 
• Pensions and ISAs.
• Check your mortgage terms. 
• Check your credit score.
• Assess your emergency fund. 

If you are concerned about any of the above, or would like to begin the new financial year with a complimentary review of your finances, contact us to arrange a meeting with one of our experienced advisers. 

This communication is for informational  purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained  in this communication is correct, we are not responsible for any errors or omissions.