News

As part of our financial wellbeing campaign, we want to ensure our clients are making the most of any available tax allowances in order for your money to work smarter and harder for you.  

Our Penrith based Independent Financial Adviser, Neil Edmondson, talks us through the planning you should consider before the end of the 2020/21 tax year.

Regardless of the fact that we have 12 whole months in a year to utilise our annual allowances, more often than not I see clients leaving it to the last hour before topping up their ISA and pension plans.  What I tend to see is a miseducation of the rules or that individuals are not fully aware of all of the options available to them.

A client of mine provided some feedback after receiving guidance and advice from me recently:

“Neil has explained everything very clearly and in terms that I can understand throughout.  I spoke to two other advisers from other firms at the outset and entered the initial discussions with all three advisers with an open mind.  Neil stood out from the rest as somebody who knew what he was talking about and was going to be there to support me through the process.  I did not get that confidence from the other two advisers.”

This feedback really stood out due to the way we made this client feel, rather than the actual work we carried out for them.  Financial wellbeing should be about peace of mind and making you feel relaxed about your financial situation.  This is why it is crucial for an adviser to educate you on elements such as your tax free allowances.

For those that are not aware, each year on 6 April the government allows each individual to save a sum of money free of income and capital gains tax in the form of an ISA (Individual Savings Account).  Currently, this allowance is set by the government at £20,000.00 and there are four ways in which you can do this:

• Cash ISA
• Stocks & Shares ISA
• Innovative Finance ISA
• Lifetime ISA

In addition to an ISA, the government allows individuals to save a maximum of £40,000.00 per annum free of tax into a pension plan, also known as the annual allowance.  The annual allowance is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief.

ISA’s enable savers to build up the sums they need to meet certain financial goals, but if you aren’t sure on how ISA’s work or how to manage your wealth to its best ability, you won’t be able to take full advantage of their benefits.  If you already have an ISA then you have to 5 April to utilise your allowance for this year.  If you have more than £20,000.00 to invest then fear not; just split the payments between this tax year and next year to fully maximise the tax efficiency of your funds.

Tax efficient planning should be built into your holistic financial plan by default, but ultimately if you’re unsure on how to do this, contact me for a free financial wellbeing review where we can ‘bottom this out’ once and for all!