The rising cost of living means it’s more important than ever not to miss out on valuable tax allowances

The past eighteen months have demonstrated how the unexpected can become the norm, and that this new ‘normal’ is changing many of our expectations. With so much to deal with it’s natural to become distracted and lose focus on some of our financial priorities.

In the current period of rising inflation and interest rates it’s more important than ever to stay focused on making sure your money is working as hard as possible for you. One of the first steps to achieving this is not missing out on the valuable tax allowances the government makes available each tax year. With that in mind, let’s look at what you need to think about before the 5th April tax year deadline:

Individual Savings Accounts (ISAs)

You can invest up to £20,000 in the 2021/22 tax year and all future investment growth will be free from personal income tax and capital gains tax. There are a number of options including cash ISAs, stocks & shares ISAs, innovative finance ISAs and Lifetime ISAs. You can put all of the £20,000 in any one of them or split the allowance between cash, stocks & shares or innovative finance ISAs. It’s your choice.

Consider junior ISAs (JISA)

Parents or guardians can open a JISA for their children. The JISA has all the tax benefits and investment choices of the normal ISA – all income and capital growth is free from personal income tax and capital gains tax. The annual investment limit is £9,000 and you can split this between a cash JISA and stocks-and-shares JISA however you wish. Although only parents or guardians can set up a JISA, anyone can pay into it.


As well as making the most of your ISA allowance, there are other tax-saving steps you can take such as paying a pension contribution. You can save as much as you like into as many registered pension schemes as you like and get tax relief on those contributions up to your annual allowance, provided you pay the contribution before age 75. The annual allowance for tax relief in 2021/22 is the lower of £40,000 or 100% of your earnings (salary and other earned income). Do this by the 5 April and, within certain limits, you will receive basic rate tax relief on your contribution. If you’re eligible for higher-rate tax relief you can claim this through your tax return.

Inheritance Tax

Official figures from HM Revenue and Customs (HMRC) for April to September 2021 show that IHT receipts totalled £3.1bn. This is £0.7bn higher than the same period in 2020. With the nil rate band and residence nil rate band frozen until April 2026 at £325,000 and £175,000, respectively, effective estate planning is vital.

Don’t miss out unnecessarily

Regardless of how or where you decide to invest your money, to take advantage of any tax incentives available in this tax year you must invest before 5 April. If you haven’t used this year’s ISA allowance by 5 April you’ve lost it forever. So, start your research now and make sure you don’t miss out. Of course, please don’t hesitate to contact us if you would like expert help to make sure you don’t pay unnecessary tax.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment depends on individual circumstances. Tax treatment rates and allowances are subject to change. Tax planning is not regulated by the Financial Conduct Authority.

Investors do not pay any personal tax on income or gains on ISAs.

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