Next tax year’s personal allowance will jump by £1,335 to £9,440, as we mention in ‘The Chancellor’s latest surprises’. Will you make the most of this increase?
If you are employed or you receive State and other pensions the answer is probably yes, because your earnings and pension count as the first slice of income for tax purposes. However, if you or your partner largely rely on investment income or have total income below £9,440, then part or all of the personal allowance could be going to waste.
Sometimes the solution is to rearrange who holds which investment, so that you each have enough income to cover your own personal allowance. Often there will also be a need to change investments, because what is suitable for a taxpayer may be inappropriate for a non-taxpayer. We can advise you on your options and warn you of the inevitable tax traps.
The sooner you start making the changes, the sooner you will be in a position to benefit from April’s increase.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Services Authority does not regulate tax advice.