11 March 2025
With just a few weeks to go before the end of the tax year on 5 April, it’s important to check that you’re making the most of your annual allowances before the new tax year begins on 6 April.
Wealth Manager RBC Brewin Dolphin highlights some of the allowances you might want to make use of.
Top up your pension
Michelle Holgate, senior financial planner at RBC Brewin Dolphin said: “Checking how much you’ve paid into your pension so far this tax year could flag an opportunity to potentially increase your retirement savings.”
The maximum tax-relievable amount you can save into a pension each tax year is £60,000 or 100% of your earnings (whichever is lower). However, your pension annual allowance may be smaller if you are a high earner. For every £2 your ‘adjusted income’ exceeds £260,000 a year (and your ‘threshold income’ is more than £200,000 a year), your annual allowance reduces by £1.
Note that the minimum reduced annual allowance you can have in the current tax year is £10,000. Your pension annual allowance applies to both your personal and workplace pension contributions. If you breach the allowance, you’ll be liable to pay tax charges.
It’s important to note that if you’re not working but are under age 75, you are still able to contribute to a pension and receive income tax relief. You can pay up to £2,880 each tax year into a pension, boosted by tax relief to £3,600.
There may be the ability to carry forward unused annual allowances from the last three tax years.
Boost your ISA contributions
Michelle Holgate said: “If you are able to, you can put up to £20,000 into tax-efficient individual savings accounts (ISAs) in the current tax year. Your gains within an ISA are free from capital gains tax (CGT) so it makes financial sense to use this allowance, particularly if you’re a higher or additional-rate taxpayer. Also, no income tax is payable on interest or dividends received within an ISA.”
A further way to boost your ISA savings is through the ‘bed and ISA’ process, which involves selling non-ISA investments to realise a capital gain and then buying these back immediately inside an ISA. This will enable future gains to remain CGT exempt. However, you may want to seek financial advice before using this tactic. Bed and ISA may involve a short period out of the market, which could potentially affect your investment gains.
Use your CGT allowance
You can make tax-free gains of up to £3,000 in the current tax year. The CGT (Capital Gains Tax) allowance can’t be carried forward into the next tax year, and it’s important to make the most of it to reduce future CGT liabilities. A financial adviser can help you use this allowance.
For gains made before 30 October 2024, basic-rate taxpayers pay CGT at 10%, rising to 18% if the gains are from residential property. Higher and additional-rate taxpayers will pay CGT at 20% and 24%, respectively. For gains made after 30 October 2024, basic-rate taxpayers pay CGT at 18%, while higher and additional-rate taxpayers pay CGT at 24%. Residential property rates remain the same.
Make financial gifts
Michelle Holgate said: “If you can afford to, you have a certain amount of money that you can gift each year that won’t be liable to inheritance tax (IHT). This allowance may also be something you want to make use of before the end of the tax year.”
You can give away up to £3,000 each tax year without this money being included in the value of your estate for IHT purposes. You can also give as many £250 gifts per person as you want during each tax year, provided you haven’t already given a gift to the same person using your £3,000 exemption.
If you want to give a larger lump sum, for example to your children or grandchildren, this money may be exempt from IHT provided you live for at least seven years after making the gift.
Consider your income tax personal allowance
Everyone has a personal allowance which is the amount of money they can earn each tax year without being liable to tax. The personal allowance in the current tax year is £12,570.
If you’re married or in a civil partnership, you may want to move some of your assets into the name of the person who is the lower-rate taxpayer or who doesn’t work, so you can minimise your tax liability. If your income is lower than the personal allowance, the marriage allowance may allow you to transfer up to £1,260 to your partner. You are unable to carry any unused personal allowance forward to the next tax year.
Michelle Holgate concluded: “Given the number of changes in allowances and rules in recent years it is important to ensure that your plans remain suitable for you now and allow as much flexibility as possible moving forward.”
Disclaimers
The value of investments can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Forecasts are not a reliable indicator of future performance.
RBC Brewin Dolphin is a trading name of RBC Europe Limited. RBC Europe Limited is registered in England and Wales No. 995939. Registered Address: 100 Bishopsgate, London EC2N 4AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.
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PRESS INFORMATION
For further information, please contact:
Siân Robertson: Sian.Robertson@brewin.co.uk / Tel: +44 (0) 20 3201 3026
Payal Nair payal.nair@brewin.co.uk / Tel: +44 (0) 20 3201 3342
Georgia Embrey Georgia.embrey@rbc.com / Tel: +44 (0)7704 667 842
NOTES TO EDITORS
ABOUT RBC BREWIN DOLPHIN
RBC Brewin Dolphin is one of the UK and Ireland’s leading wealth managers and traces its origins back to 1762. With £57.6bn* billion in assets under management, it offers award-winning, bespoke wealth management services, including discretionary investment management and financial planning.
Its qualified investment managers and financial planners are based in over 30 offices across the UK, Jersey and Republic of Ireland, with a commitment to high standards of client service, long-term thinking and absolute focus on clients’ needs at the core.
As part of Royal Bank of Canada (RBC), RBC Brewin Dolphin is now able to draw on the strength of a global financial institution to enhance the services it provides to clients and to drive further innovation across the business.
*as at 31st October 2024.
ABOUT RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 98,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada’s biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 19 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.
We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/peopleandplanet.