As we start the 2025/2025 new tax year, the importance of effective tax planning cannot be overstated. Early preparation and strategic planning are essential for minimising tax liabilities and maximising opportunities for savings and investments.
In this post we will explore the key strategies and considerations for navigating personal tax planning in the new tax year 2024/25. We will get through this is less than 5 minutes, we promise!
Make full use of your ISA allowance
First things first, make sure that you’ve topped up your ISA. These are great tools and a very efficient way to save money as you don’t have to pay income or capital gains tax when you withdraw from your account.
Everyone above 18 is entitled to put £20,000 into an ISA, regardless of income, so make sure you and your spouse/partner have used as much of your allowance as possible. You can also place up to £9,000 into a junior ISA.
There are different types of ISAs based on your preference for risk – the higher the risk, the higher the potential reward. You also have to think about things like long-term inflation. Always speak to an adviser before setting up an ISA.
Pension contributions
Making regular pension contributions is very important – not just because you’re saving up for retirement, but because there’s tax relief available to help you build up an even larger pension pot.
Under the current rules, you can pay up to £60,000 of your relevant earnings and receive tax relief at your marginal rate. You can save more than this – you don’t get tax relief on the excess.
The tax relief is something to take seriously. If you’re a higher-rate taxpayer, you can get up to 40% tax relief, meaning for a £6,000 pension payment, the government will contribute an extra £4,000.
Inheritance tax and gifts
The best advice we could give regarding inheritance tax is to start as early as possible. You can do that by giving gifts. It’s better to do this while you’re fit and healthy because gifts given in the last seven years of your life may be liable for a tax charge.
Here’s what you can give tax-free each tax year:
• Annual gifting allowance of up to £3,000.
• You can give as many small gifts as you like if they are not worth more than £250.
• A wedding gift for your child worth up to £5,000, £2,500 for your grandchild, and £1,000 for anyone else.
Capital gains tax
Capital gains tax is applied on assets that you sell for a profit. Everybody has an allowance of £6,000, which means the first £6,000 of profit you make in a tax year is tax-free. If you made a loss, you can carry it forwards to offset future gains.
However, for the 2024/25 tax year, the allowance will be reduced to £3,000, meaning the first £3,000 of gains that you make in the tax year is tax-free.
Need help with tax planning for the new tax year?
Navigating tax regulations can be complex and honing your financial strategy can be daunting, but we’re here to help. At RPGCC, we’ll put you first and ensure you’re in the best possible position for your future.
If you would like to speak to a member of our Financial Services team or our tax team about how we can help you prepare for the new tax year and plan your 2024/2025 tax affairs, please contact us on 020 7870 9050 or email us at hello@rpgcc.co.uk.
