Your tax efficiency checklist

To help you keep more money for your future.

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Ways on how to improve tax efficiency

Have I used my ISA allowance?

From April 2024 the rules changed so you can pay into multiple ISAs (Individual Savings Accounts) of the same type in each tax year. Savings or investments held inside an ISA are free of income tax and capital gains tax (CGT) up to the below allowance.

For the current tax year the allowance is:

  • Up to £20,000 in personal ISAs
  • Up to £9000 in a junior ISA

You may want to consider making as much use of this allowance as you can before the end of the tax year on 5th April 2025.

Do I need to consider Inheritance Tax (IHT) planning?

IHT is the tax payable when someone dies.

IHT may become payable if the value of a deceased person’s estate and the combined total of any capital gifts they made exceed the allowances available.

The value of an estate includes all worldwide property, possessions, investments and savings and all capital gifts above made in the seven years prior to death.

Each individual has a Nil Rate Band of £325,000 that does not attract IHT.

If the deceased owned a property that is being passed to direct descendants, then they may be able to claim up to £175,000 Residence Nil Rate Band (RNRB) in addition to the NRB.

The amount of NRB may be affected if an individual gifts money and assets during their lifetime.

You should consider estate planning during your lifetime by writing a will, using gifting or setting a trust. The rules can be complicated, and you should ensure you receive legal and financial advice to make sure any plan of action does not affect you adversely.

 

Does capital gains tax affect me?

Capital gains tax (CGT) is the amount you pay on any profit you make when you come to sell an asset, such as a second home, shares or a piece of artwork.

How much you can earn before paying capital gains tax was cut to £3,000 from April 2024, so more people may have to pay on their profits.

Capital gains tax on residential property sales was reduced from 28% to 24% following the Spring Budget.

“The rules are complex and rates differ for basic rate and higher rate tax payers, and by property and non-property assets, plus reduced allowances means financial planning will become more important for many of us.

Some may use ISAs to provide a tax efficient solution when protecting gains on investments, but it’s important to choose the step that’s right for you.”

Makala Green, Personal Wealth Adviser.

Could I be paying more into my pension to save tax?

Higher earners in Scotland face greater tax liabilities than people elsewhere in the UK. But this means they could gain a greater tax benefit from saving into a pension.

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Wealth education

Read articles on financial advice and Schroders Personal Wealth

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