26/01/08 - TIME TO MAKE SOME NEW TAX YEAR’S RESOLUTIONS
Co-operative Insurance is urging consumers to get their own back on the Inland Revenue and make some resolutions for the forthcoming tax year.
With the new tax year beckoning on 6 April, Co-operative Insurance has put together some tips to help people make the most of their allowances and use the opportunity to potentially save thousands of pounds.
Individual Savings Accounts (ISA)
ISAs allow people to save in either stock market-based investments or a traditional savings account. Interest earned on the savings within an ISA are free from tax.
From April 6, the annual allowance increases from £7,000 to £7,200, while the amount that can placed in a traditional savings account rises from £3,000 to £3,600. The existing system will also be made more simple and make it easier to transfer between schemes.
Tax relief on pension contributions vary depending on the type of scheme.
The pension provider claims back tax from the government at the basic rate of 22 per cent. It means that for every £78 placed into a pension, the government tops it up to £100. While those on the higher rate of tax can also claim back the difference between the basic rate of 22 per cent and the higher rate of 40 per cent, equating to 18 per cent.
Company pension schemes
Employers take pension contributions at source of pay before deducting tax, meaning tax is only paid on the remainder. Higher rate taxpayers can get the full relief straightaway without having to claim it back from the Government.
HMRC allows up to £3,000 per year to be given away from an estate. Additionally, up to £250 per person can be given away as ‘gifts’. While there is an option for parents to make a ‘gift’ when a child gets married.
Capital Gains Tax
Capital Gains Tax is paid when someone makes a gain on an asset for more than they paid for it. There is an allowance of up to £9,200 per year, and the same amount can be split with a spouse or civil partner therefore doubling the allowance.
Zach Hocking, Head of ISAs at Co-operative Insurance said: “The new tax year offers people an opportunity to take advantage of annual allowances and potentially save thousands of pounds.
“The good news is that it’s fairly simple to do, just by making contributions to an ISA or pension, people can take advantage of tax breaks.”