End of Tax Year Checklist

End of Tax Year Checklist

Make the most of the tax year end with these helpful tax allowance tips. Please note tax rules are subject to change over time and the benefits of these tax wrappers depend on individual circumstances.

  • Open an ISA (Individual Savings Account) – You can shelter upto £15,240 from income and capital gains tax this year. Remember if you dont lose your ISA allowance for the tax year, you lose it!
  • Open a Junior ISA – The junior ISA allowance is currently £4,080 and offer similar tax benefits to adult ISAs. All children are now eligible for these new tax wrappers.
  • Use your Personal Allowance – Reports are suggested that the Chancellor is considering cutting tax relief in an effort to reduce costs, this could mean higher rate and additional rate tax payers lose out.
  • Use your Capital Gains Tax Allowance (CGT) – This tax year you can realise £11,100 without paying tax, if you hold shares or funds outside of a tax wrapper it could be a good time to sell some.
  • Reduce your Inheritance Tax (IHT) – Make gifts of upto £3,000 from capital each tax year, which will be exempt from inheritance tax. You can also carry forward any unused allowance from last tax year.
  • Seek advice – if you need help in making the most of your tax shelters and allowances, speak to an Independent Financial Adviser who can assist you.
Pension Reforms in April 2015

Pension Reforms in April 2015

PENSION REFORMS – It’s All Changing

As many of you may already know the Government have recently proposed the biggest changes surrounding pensions that have been seen for many decades. These changes aim to provide people with the freedom and flexibility to choose how they access their pensions from April 2015.

Previously, the Government attempted to steer most people to purchase annuities (income for life contracts) with their retirement pots however, historically annuities often provide a low annual income and the pension pot is potentially lost after an individual dies. Therefore, the changes supply people with more choice with the money they have worked hard to save.

Prior to the Transition Rules the pension pot options were:

Pension unlocking in AprilSource: gov.co.uk

The Government in March 2014 announced some transitional rules until the new pension rules are launched in April 2015, which allowed the following:

  • Trivia Commutation increased to £30k from age 55.
  • Capped drawdown increased to 150% of GAD
  • Flexible drawdown only required a secure income of £12,000.
  • Small pension pot increased from £2k to £10k


With these changes, the Government is determined to offer individuals more flexibility in regards to how they take their pension. Irrelevant of the size of your pension pot, individuals aged 55 or over in April 2015, will have absolute freedom in regards to how much they can draw out of their pension, and when they choose. There are no limits or restrictions set by the Government and individuals will only pay their marginal rate of income tax, whilst still benefiting from taking up to 25% of your pension pot tax free.


These changes will generate several benefits including Inheritance Tax. Previously, once you started taking money from a pension pot it became part of your estate, consequently beneficiaries could end up paying 40% IHT tax. Now, if an individual dies before reaching age 75, their pension pot can be passed on completely tax free and therefore, does not fall into your estate.

TAX CONSIDERATIONS – it’s not all free

However, there are tax implications that need to be considered. If you take out your pension pot as a lump sum, or empty your pension pot in the first few years, although you will receive 25% tax free, you will have to pay a marginal rate of income tax on it depending on the amount, either 0%, 20%, 40% or 45% which could amount to more tax paid than if you gradually paid yourself an income over 20 years.

Therefore, it is essential that you obtain professional advice from a financial adviser to establish the most appropriate method of obtaining your retirement income; as it will help you to take an income that doesn’t drain your pension pot whilst also determining the best route to take in regards to tax planning.

Although the flexibility and freedom these changes are bringing to pensions can benefit you, it is also important to be aware that if you spend all your pension pot too quickly and find that you are then living off the state pension, you may have to contemplate going back to work. Therefore, it is necessary to plan ahead with your retirement income as with life expectancy rising, you may find that you are working or going back to work for much longer than anticipated.

STATE PENSIONS – A Flat rate Credit

Seeking help from a financial adviser is crucial with helping with your financial planning. If you have reached your state pension age and are still currently working or are not in desperate need of it, you could benefit in the long term from deferring it.

Currently, if you were to defer your state pension for just one year, your pension would increase by 10%, and after this year, you could request that any deferred pension is given as a lump sum. Therefore, if you are in good health or want to continue working for a little longer, you would benefit considerably from deferring your state pension. However, with the new flat-rate state pension being introduced in 2016, deferring your state pension will only increase by 5.8%. In order to qualify for this new flat-rate state pension, you must have contributed 35 years’ worth of National Insurance contributions, which would provide you with £152 per week.

According to Government figures, only 45% of new pensioners will be entitled to the new flat-rate state pension. Therefore, it seems the majority might benefit greatly from deferring their state pension.

To find out more or to speak to a financial adviser call Heritage Financial Solutions Ltd on 01352 770 845, or email us at info@heritagefs.co.uk.

Understand the New NISA Rules

On 1 July 2014 ISAs changed. The New ISA, or “NISA” (New Individual Savings Account) changes allow ISAs to be used as a home for even more money by increasing the yearly contribution limit, and improve flexibility by allowing money to be transferred from stocks and shares ISAs into cash ISAs.

NISA qualification

Different NISAs have varying degrees of qualification. You must be:

  • Aged 16 or over to open a cash NISA
  • Aged 18 or over to open a stocks and shares NISA
  • There are separate NISAs for children under the age of 16 – these are called junior NISAs

NISA allowance

The allowance is the amount the government permits you to invest in your NISA accounts during each tax year. At the start of each new tax year (6 April) you’ll receive a new allowance. If you don’t use it, you lose it – the allowance can’t be rolled over to the next tax year. By using your NISA allowance each year it’s possible to accumulate a significant amount of tax-efficient savings.

In the 2014-15 tax year, individuals can invest up to £15,000 a year in cash NISA accounts, stocks and shares NISAs, or any mixture of the two – you can save the entire £15,000 in cash if you so wish. In the 2015-16 tax year this limit will increase to £15,240.

Remember that you’re only able to open a maximum of one cash NISA and one stocks and shares NISA each year. Once open you can transfer money between these different types of NISAs freely, subject to your provider’s terms.

This differs to the old Individual Savings Account (Isa) rule where you could transfer money from cash ISAs to stocks and shares ISAs, but not vice versa.

Transferring NISAs

You can easily switch your NISA provider without losing your tax-free allowance, but it’s vital that you transfer the NISA rather than withdrawing the money to open a new account.

Under the old Isa rules, cash ISAs could be transferred into stocks and shares ISAs, but not vice versa. NISAs allow transfers either way – from stocks and shares to cash and vice versa.

As with ISAs, it is also still possible to transfer each type of NISA to another product of the same type. You can, for example, transfer one cash NISA to another, something you may want to consider to obtain a better interest rate.

Within a tax year you’re only able to transfer the whole of your annual NISA to a new provider. Amounts from previous years may be transferred as a whole or in parts as you wish, but you should be aware that not all NISA providers will allow part transfers.

Enterprise Investment Schemes

Enterprise Investment Schemes

Enterprise Investment Schemes (EISs)

These schemes were launched with the idea of helping smaller companies who carry higher risks to enhance their growth. The main objective was to attempt to inject more finance into these companies to try and further their development.

In order to raise this finance, EISs offers tax advantages to investors when purchasing new shares within these smaller companies. These schemes offer more tax relief than other investment opportunities as they often hold a considerable amount of risk due to investing within one specific company, rather than spreading the risk over several smaller companies such as within a VCT Scheme.

These schemes are usually aimed at individuals who can afford to tie up their money for a longer period of time and individuals who would feel the benefit a considerable amount of tax relief.

Main Benefits

  • Individuals can claim up to 30% relief for income tax amounting to a maximum investment of £1,000,000 (up to £300,000 relief).

This tax relief can only be claimed if you have held the shares usually for at least 3 years (from the date of issue) and if you are not connected to the company.

  • Exemption from Capital Gains Tax

This scheme enables you to have relief on the gains you make from your investment and may even enable you to defer your capital gains tax depending on your circumstances.

  • Relief of 100% can be claimed from inheritance tax

This relief applies as long as you have held these shares for at least 2 years and still own them at death.

  • Loss relief of up to 45% can be claimed

If shares are sold at a loss, this amount, less any relief from income tax allowable, can be set against income of the year in which they were disposed of, or any income of the previous year, instead of being set off against any capital gains.

The information provided should be treated solely as a guide and you should seek professional advice regarding your own personal circumstances and objectives.  

Venture Capital Trusts VCT

Venture Capital Trusts VCT

Venture Capital Trusts were introduced in order to encourage individuals to invest in a variety of smaller companies with added risk, which are not listed on the Stock Exchange.  The aim was to help these smaller companies with further development.

How They Work

VCTs pool together your investments, along with other individuals’ investments with the objective of spreading the risk over a range of small companies. Individuals can invest by purchasing shares from investors from an established trust or you can also subscribe to new shares. The tax relief obtained from these investments often play a big role in encouraging individuals to invest within these smaller companies.

Tax Relief

  • There is a 30% Income Tax relief on new ordinary shares each tax year on investments up to £200,000.
  • There is no Income Tax to be paid on dividends received from ordinary shares.
  • There is no Capital Gains Tax (CGT) to be paid from the gains of your investment.

In order to feel the benefit from income tax relief, you will have to of held shares in a Venture Capital trust for at least 5 years. As long as the VCT preserves its status, there is not a minimum period where you need to hold shares to obtain the relief from CGT.

Risk & Charges

It is important to be aware that your investment could go up or down in value. Although these smaller companies could offer higher returns, the investment could result in you getting back less than you put in due to the risk involved. Charges can often also be higher for VCTs compared to alternative investments.

The information provided should be treated solely as a guide and you should seek professional advice regarding your own personal circumstances and objectives.