Dear Valued Customers

As we start the new financial year. It’s a good time to start thinking about your finances and setting aside funds for your future. Here’s a concise guide to the key tax allowances you should be aware of while planning:

Tax Allowances for 2024/25

ISA Allowance

 Maintain your savings flexibility with an unchanged ISA allowance of £20,000, which includes a £4,000 allowance specifically for Lifetime ISAs. This year, there’s more flexibility with the ability to open more than one ISA of the same type within a tax year.

Pension Annual Allowance

The standard allowance remains at £60,000, though it may be reduced to £10,000 for high earners or those who have already accessed a pension. This is crucial for planning your retirement savings effectively. 

Abolition of Lifetime Allowance (LTA): The Government announced the removal of the LTA framework from pensions tax legislation starting from 6 April 2024. 

Junior ISA Allowance

Invest in your child’s future with up to £9,000. Junior ISAs are a fantastic way to build a nest egg for your children’s future.

Personal Allowance

You can earn up to £12,570 before you are liable to pay income tax, maintaining a threshold for basic tax-free income.

Dividend Allowance

Note the significant reduction in the dividend allowance to £500 this tax year. Dividend income above this amount will attract tax at your marginal rate, making it important to plan your investment income.

Capital Gains Tax Allowance

The allowance stands at £3,000. Profits above this from selling assets like shares or property are taxable. Use our to estimate potential taxes on your gains.

Personal Savings Allowance

Basic rate taxpayers can earn up to £1,000 in interest without tax, while higher rate taxpayers have a £500 allowance. It’s a great way to earn from your savings efficiently.

Plan Ahead

Tax rules are subject to change and depend on individual circumstances.

Effective planning can help you maximise these allowances & relieve your tax burden. Consider scheduling a consultation with us to discuss how we can optimise your financial planning for the year ahead.

Stay proactive about your financial health and make the most of your allowances this tax year. For further details or to schedule a consultation to discuss your financial strategies, do not hesitate to contact us.

Kind Regards,

Deepti Agarwal ACA

Watermill Accounting