Half-Time! for the tax year 2012/2013....Using Annual Allowances

The tax year starts on the 06th April each year and this is usually a busy time in UK retail financial services. The last minute pension and Individual Savings Account (ISA/Maximum £11,280 in 2012/2013) deposits are invested in time to use the annual allowance before the opportunity is lost. Many also look at any potential gains that have been made during the year to see if, where applicable, capital gains tax allowances (£10,600) can be used.

As we approach the halfway point of this tax year (2012/2013), we normally suggest that these annual allowances where unused, are visited to see if now is a good time to use them up? The gain for Chapters Financial is that we are spreading the years’ workload, but the gain for our clients to look for opportunities that may or may not be there when that annual tax year end rush occurs.

An example might be the recent rise in equity values/markets (past performance is not a guarantee of future performance and fund values can fall as well as rise and are not guaranteed) where gains on existing Unit Trust/Open Ended Investment Companies (OEICs) may be available and could efficiently be taken to use up the current capital gains tax allowance of £10,600. If you have capital losses available that could be bought forward, these may be used at the same time, however, we would recommend that you check this addition with your Accountant before proceeding. If you have not used your ISA allowance in this tax year and a gain is taken, you may choose to re-invest some of these proceeds into an ISA, up to the maximum of £11,280 in 2012/2013. If your spouse/partner has not used their allowance, this may provide an additional tax efficient opportunity.

Reviewing pension contributions is always worthwhile (standard limit £50,000 gross contribution pa/ total employer/employee) and it is not uncommon for Director/Managers to make single top-up contributions to pensions at this time of year. This timing may also be a reflection of their business year ends. 

As you can see from the notes above, a mid-year review may well be worthwhile in looking at the opportunities that may present themselves as we start the autumn 2012 season.

No individual advice has been provided during the content of this Blog and Chapters Financial Limited can help you with your tax year annual allowance planning both now and throughout the tax year(s).

We look forward to working with you. 

Keith Churchouse, FPFS, Chartered Financial Planner, ISO22222 Personal Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number 402899.