WANT TO HOLD ON TO MORE OF YOUR HARD-EARNED CASH BEFORE THE NEW TAX YEAR STARTS? VICKY SHAW FINDS OUT HOW
THE current tax year end – April 5 – is fast approaching. But with the new tax year starting on April 6, there’s still time to take advantage of opportunities that will make your money work harder for you.
Restrictions around the pandemic mean some people will have spent much less during the 2020/21 tax year than they normally would.
While many people have seen finances devastated by the impact of the pandemic, a recent Financial Conduct Authority (FCA) report found that 48% of adults have not been affected financially by Covid19 and one in seven (14%) have actually seen an improvement in their situation.
The new tax year will bring new allowances, so those lucky enough to have surplus savings may want to make the most of those still available to them in the 2020/21 tax year.
Here, Laura Laidlaw, head of customer savings at Standard Life, offers some tips on what to do with any money and spare savings before the tax year comes to a close...
ISA ALLOWANCE – USE IT OR LOSE IT
With a new tax year comes a new set of annual allowances, or in other words, the limit on how much you can save into an Isa while still benefiting from tax breaks.
Currently, you can save up to £4,000 in a Lifetime Isa and £20,000 in other Isa products tax-free in any tax year, making Isas a tax-efficient option for any extra savings that some people may have acquired during the lockdowns.
PICK THE RIGHT ISA FOR YOU
With several different Isas available, it’s important to know which one is right for you, especially if you are considering putting a significant sum of money away ahead of the new tax year.
Cash Isas, which can be accessed easily, can be handy places to keep an emergency fund if something goes wrong, such as a boiler breakdown.
And Lifetime Isas come with a bonus and could be useful for those saving for their first home.
Stocks and shares Isas, meanwhile, may be useful for longerterm goals. They may potentially secure savers better returns for their money at a time when interest rates are at an all-time low.
However, this option involves actively investing, so those considering it need to be aware that it comes with a level of risk. The value of investments can fluctuate.
Remember, the £20,000 limit applies to the total amount that can be saved into Isas, across the different types, in the current tax year.
Before choosing any option, it’s wise to make sure you have some money set aside in an account that can be easily accessed, just in case, whether it’s in an Isa or elsewhere.
GIVE YOUR PENSION A LITTLE LOVE
Even if retirement seems far away, increasing your pension contributions as you approach the tax year end could pay dividends to your future. Much like your Isa allowance, you will also have an annual allowance on how much you can pay into your pension. This is generally capped at £40,000, or 100% of your earnings, whichever is lower.
If you have any extra savings to put away, you could consider setting up a private pension or upping any workplace contributions to redirect some of that additional money into your pension.
Even small boosts to your pension plan can go a long way.
Some firms will offer salary sacrifice schemes. Under some schemes, employees agree to reduce their earnings by a sum which equals their pension contributions.
The employer, meanwhile, agrees to pay the amounts sacrificed as pension contributions.
There are potential tax benefits to salary sacrifice schemes, however taking part could also affect financial applications such if you need a mortgage, for example, as the employee’s earnings will be less.
BE SAVVY WITH YOUR BONUS
In the current climate, there may be fewer or smaller bonuses this year. However, for those lucky enough to still be receiving one, it may coincide with the tax year end.
This timing can sometimes be tricky when it comes to tax planning at tax year end. For some, the extra money means they are pushed into a higher tax bracket, which could mean allowances and benefits are lost.
If they don’t immediately need the bonus cash, some people may want to consider redirecting any bonus payments into their pension, whether this is by setting up a private pension or asking their employer to direct it into their workplace pension.
Cash Isas, which can be accessed easily, can be handy places to keep an emergency fund if something goes wrong Laura Laidlaw
DURING the last 12 months there has been the steady development of a fresh vocabulary. The first new word to enter our regular speech was “pandemic”. It is not a new word, but hardly one regularly used in this country until last March. Now it features regularly and I suspect will not go away.
Thankfully the new vaccines have apparently controlled it and with luck will do so into the future until science finds a way to kill the deadly virus.
As we got used to having a pandemic in our lives, we also had to experience the dreaded “lockdown”. Again, not a word new to the English language, but certainly new to daily use. “Lock-up” we understood, as it was applied to those who for whatever reason were incarcerated in one of the penal institutions we have. That definition will be around for ever, but we are all hoping we will see the end of “lockdown” by June, and never hear the hated words again.
That will depend on the next addition to our daily vocabulary. We now have a “road map”, the term created by BoJo for what is in fact a plan of action to remove the current “lockdown”.
For some reason, the Prime Minister has determined to call it a “road map” to describe what every manager I have ever met calls an “action plan”. I wonder if he will ever return to what I heard last week called “grown-up language” or this childish phraseology will increase as his latest youngster begins to talk?
We have all got totally familiar with the fresh word for an injection. Now it is called a “jab’” and when we have either a flu or Covid injection in years to come, this new use of a “jab”, I guess, will continue.
It is not new to the dictionary, but was normally used in the boxing ring to describe “a punch in the face”. This word is regularly used by the media and has become a common word for us all.
Another fresh use of a word I had rarely heard before is “furlough”. I had never really used the word so needed the explanation that it meant the Government was going to financially support people who were laid off work due to the pandemic.
This action has been a salvation for many, and I simply wonder how long this financial support will stay in place once lockdown ends.
These new terms keep arriving and the latest to hit my ears has been the “jab passport’” This has been described on the news as a document to prove that you have had the “jab” and are now protected from the virus. This may well be required to enter a pub, a theatre or a restaurant when these establishments open.
It could be a useful idea, but it does sound like the identity card schemes of old that we have all chosen to resist. Will this version prove more popular?
As always, I have enjoyed finding some fun in what is currently happening in this closed-down country. I know the lockdown is hardly funny, but at least laughing at it in some way makes it perhaps easier to live with! In reality, I am just pleased to see an action plan that may well get us out of lock down and mean we can take the holiday we gambled on booking for July in the UK.
It is a delight to see the schools opening after what has been a whole year out. Schools, I do believe, will be the first organisations to recreate the normality for the future. Thereafter I am looking forward to a haircut, a trip out for lunch and maybe a visit to the tip to get rid of all the rubbish I have collected over the past 12 months!
I know the lockdown is hardly funny, but at least laughing at it in some way makes it perhaps easier to live with!
“FOOD enthusiast Gregg and Australian chef John have served up a new series of MasterChef.
“They’re hoping to discover passionate cooks and avoid accidental poisoning throughout.”
You can almost hear the MasterChef voiceover now, that soothing narration that is all set to guide us through the next six weeks.
Now somewhere in the region of eleventy billion series in, we viewers know the drill. Forty amateur cooks will be put through their paces in intense heats, all hoping to be awarded a coveted white apron and ultimately win the crown.
With five contestants in each heat and only four aprons, competition is fierce from the get go.
The first contestants in HQ are Tom, Mike, Dominique, Madeeha
MASTERCHEF
and Ross, who must delight judges by cooking their Signature Dish.
“This is their chance to really tickle my palate and put a smile on my face,” says John.
“There is no reason why their signature dish shouldn’t be an absolute showstopper,” continues Gregg.
From lobster thermidor, to spiced chicken, the dishes are all impressive. But only two cooks will win aprons at this stage.
The remaining three contestants will have to pull out all the stops as they whip up a dish having been presented with their favourite ingredient.
After this, one cook is sent home, while the remaining four cooks must cook two courses to wow John, Gregg and guest food industry experts.
Tonight their fate is in the hands of Thomas Frake, last year’s MasterChef Champion and 2014 Champion Ping Coombes.
With only two quarter final places up for grabs, the heat is most definitely on.