Make the most of your 2015 tax allowances
The financial year ends in a matter of weeks, so make sure you're not letting tax allowances go to waste
The end of the tax year is nigh and when the clock strikes midnight on 5 April you'll lose access to a range of tax-free allowances if you haven't used them. Here are the allowances available to you and how you can make use of them:
This tax year you are allowed to invest up to £15,000 into an Isa. Once that money is in an Isa any growth is free from income tax, capital gains tax and higher dividend tax (the basic 10% dividend tax will still be deducted if you opt for stocks and shares Isas).
That tax-free status can make a huge difference to your returns. If you had invested the full amount into Isas each year since they were introduced in 1999 you would be almost £5,000 better off than if you had put the money in standard savings accounts, according to research from Moneysupermarket.com.
That allowance resets itself at the end of the tax year. So, if you haven't already done so, move any savings you have into an Isa. Remember, the allowance is allocated per person meaning couples can move up to £30,000 beyond the taxman's grasp.
Capital gains tax allowance
Every tax year each of us is allowed to make up to £11,000 in capital gains before we are liable for capital gains tax. This is the profit you make when you sell assets, and it covers everything from selling shares to art to property (your own home is exempt but buy-to-let properties are liable). Go beyond that allowance and you will have to pay up to 28% in tax on your profits.
You cannot carry that allowance over to the following tax year, so if you know you are going to be liable for a large amount of capital gains tax next year, and it is possible to sell off some before 5 April – for example share sales – do so. By splitting the gain across two tax years you benefit from two capital gains tax allowances.
Also, if you are married or in a civil partnership and know you are going to make more than your allowance consider moving some assets into your partner's name so you can use his or her capital gains allowance too.
Inheritance tax allowance
If you have assets worth over £325,000 your estate will be liable for inheritance tax at a rate of 40 per cent. To minimise this you can give money and assets away each year. But, there is a cap on how much you can give: if you go above these limits and die within seven years the gifts will be liable for inheritance tax.
This tax year you can give away the following without fear of a future inheritance tax bill:
Up to £250 each to as many people as you like
Up to £3,000 in total on top of the £250 gifts, but you cannot give the £3,000 to the same people as the £250 gifts. Any unused part of this allowance can be carried over for one tax year.
Wedding gifts – up to £5,000 from each parent of the couple; £2,500 from each grandparent or more remote relative; £2,500 between the couple; £1,000 from anyone else.
Up to £55,000 between husband and wife or civil partners
If you haven't yet made any inheritance tax gifts, or used your full allowances now is the time to do it.