How to make the most of personal tax allowances in 2024

Posted 22.04.2024

One of the most important aspects of investment planning is making the most of your money, and one of the smartest ways of doing this is to maximise your tax allowances each year. Doing so will not only help achieve your longer-term goals quicker, it can also make sure you’re not missing out on valuable tax advantages.

Whether you’re looking to start a family, saving to buy a home or planning for retirement, these big life events need a solid financial plan behind them so they can be achieved in the time you want – and in the way you want.

This article explains what some of the main tax allowances are, how much you can save and ways in which you can do so.

What is the pension annual allowance? 

The pension annual allowance is the maximum amount that can be paid into a pension each tax year. This includes contributions from yourself, your employer, any third party as well as tax relief paid to the pension.  The current annual allowance is £60,000. However, you’ll only personally get tax relief on contributions up to 100% of your earnings or £3,600 – whichever is higher – in each tax year.

ISA Allowance

With a Cash ISA or a Stocks & Shares ISA (or a combination of the two), you can save or invest up to £20,000 a year tax-efficiently, without paying any capital gains or income tax on the interest or profits.

Personal Savings Allowance

You also have a Personal Savings Allowance, which means you can earn tax free interest of up to £1,000 this tax year if you are a basic rate taxpayer and up to £500 if you are a higher rate tax payer. There is no allowance for additional rate tax payers.

How can I use my personal tax allowances?

The first point of call is to speak to your financial adviser who will guide you on your personal allowances available and how to plan your investments around your different objectives. Tax-efficient pensions and Individual Savings Accounts (ISAs) are two of the most important options.

You can make a lump sum investment into either your pension or ISA before the 5th April 2025 to use your personal allowance for this financial year. If you have received a work bonus or have some savings that you want to invest tax efficiently this is a great way to invest your money to help you achieve your financial goals.

If you are a couple, you can invest up to £20,000 each. That way, combined, you can save, (in Cash ISAs or Stocks & Shares ISAs) up to £40,000 tax-efficiently each year.

Book a call to get sound advice on the best ways of maximising your personal tax allowances in 2024.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are generally dependent on individual circumstances.

Cash ISAs are not available through St. James’s Place.

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