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Tax year planning:...

1 March 2022

4 min read

Tax year planning: helping you every step of the way

The clock is ticking if you want to use this year’s tax allowances - and make the most of any savings you might have accrued.

Freddie Cleworth
Freddie Cleworth,

Chartered Wealth Manager

March is upon us, and it’s time to shake off the winter blues and start looking ahead. All of us in the UK are subject to the same tax year that runs from 6 April to 5 April the following year. On 6 April, all tax-free investment allowances are reset.

Making the most of the current tax year can make a big difference over the long run. To make sure you take full advantage of your ISA and pension allowances, it’s wise to make contributions with plenty of time to spare to avoid any last-minute worries.

What is the annual allowance for an ISA?

Every tax year you are allowed to put £20,000 into your ISAs. So, whether you are investing in a stocks & shares ISA, a Lifetime ISA, a cash ISA, or an innovative finance ISA, you have £20,000 to invest for that tax year without paying tax on the growth of those contributions.

You may invest in one of each different respective ISA per year but your cumulative investments in ISAs must not be above £20,000.

What is the annual allowance for a Junior ISA?

In this tax year, up to £9,000 can be contributed for each child by parents, grandparents, family members and friends. This does not affect your £20,000 ISA allowance as the money belongs to the child in whose name the Junior ISA has been set up.

Junior ISAs are a great way to put money away for a child’s future. Gifting money in this way is also a great opportunity for those with estate planning needs who want to see their wealth passed on effectively to younger generations.

What is the annual allowance for a pension?

For the 2021/2022 tax year the annual allowance is £40,000 for most people.  The annual allowance applies across all your pension savings, not per scheme. Contributions above this amount will not get tax relief.

There are, however, a few stipulations to bear in mind. For example, your yearly allowance is capped at your yearly salary. If you earn £30,000, this is the most you can contribute in one tax year.

What is the annual allowance for a general investment account?

For a general investment account (GIA), there is no tax-free allowance. The GIA is most used by those who have used their £20,000 ISA allowance for the tax year first.

Once you’ve reached your ISA limit for the tax year then a GIA is a good way to invest beyond that, though your GIA returns may then be taxed.

What is the annual allowance for Venture Capital Trusts?

For sophisticated investors, tax incentives available with Venture Capital Trusts (VCTs) are undeniably attractive. You can invest up to £200,000 in VCTs per tax year and receive tax relief of up to £60,000.

To benefit, you must have paid or owe as much tax during the tax year in which you invest. To keep the relief, you must hold the investment for at least five years.

Not sure about tax year end

When it comes to choosing how you invest, then there is no need to rush either. To secure your allowance for the year, you can put the amount you want to invest into your account as cash.

If you have any questions about allowances, deadlines or how you can make the most of them and create the financial future you want, please don’t hesitate to get in touch.

Freddie Cleworth

Freddie Cleworth

Chartered Wealth Manager

Freddie is a Chartered Wealth Manager. He joined EQ in 2015 having gained experienced in a variety of roles within larger financial organisations. He provides advice and financial planning for a wide range of clients, and is a strong advocate for technological innovation within personal finance. Away from the office Freddie enjoys cooking, reading, and keeping fit.



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