Here are a few figures worth knowing in 2020–21 to help maximise your tax allowances and exemptions:
The National Insurance threshold is £9,500 and the Personal Allowance remains the same as last year, at £12,500.
The Annual Allowance for pensions is £40,000 and begins to taper (to a minimum of £4,000) for those who have an income above £240,000. The Lifetime Allowance – the maximum amount you can have in a pension over a lifetime – has increased to £1,073,100. From April, the new single-tier State Pension has risen to £175.20 per week and the older basic State Pension increased to £134.25 per week.
The annual amount you can save into a JISA (Junior Individual Savings Account) or Child Trust Fund has increased substantially, from £4,368 to £9,000. The ISA (Individual Savings Account) allowance, including the Lifetime ISA allowance if used, is £20,000.
Inheritance Tax (IHT)
The current IHT nil-rate threshold is £325,000 for individuals and £650,000 for a married couple or civil partners. Beyond these thresholds, IHT is usually payable at a rate of 40%. The main residence nil-rate band, which may apply if you leave your main residence to a direct descendant, is £175,000.
We can advise you on taking sensible steps to reduce the amount of tax you pay, on the path to achieving your financial goals.
It is important to take professional advice before making any decision relating to your personal finances. Information within this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.
Tax and Estate planning are not regulated by the Financial Conduct Authority
The value of pensions and investments can fall as well as rise. You may get back less than you invested.
Will writing is not regulated by the Financial Conduct Authority. Quilter Financial Planning Ltd are not responsible for any will writing advice.