Some things in life you just never get back: tax-year specific benefits in the UK are one of those things that you have to use or lose.
At IFG we want to make sure that you use them as long as they're relevant to you. So here's 3 essential tips for tax year end.
1. Use your ISA Allowance
Every year, we get a £20,000 allowance that the Government allows you to put into an ISA. Not the haram interest-bearing cash ISAs that you might have heard of.
We're talking about a drum we've been beating for many years now: the stocks and shares ISA.
The huge benefit of an ISA is that all your gains are completely tax-free. Seriously. Your account could swell to tens of millions and you wouldn't be taxed on any gains. You'd just withdraw the money (with a big grin, I'd imagine).
If you're in a position where you can invest £20,000 in to the stock market within a given tax year, you should absolutely be going for it.
If you're in a position where you can invest £40,000 and you're married, you should get your spouse to open a stocks ISA and get £20,000 into there too.
Any more than that, and you should consider a Junior ISA, where the limit is a healthy £9,000.
If you're stuck on which provider to sign up for an ISA with, check out our article here on UK stock brokers.
AJ Bell and Trading212 are both popular.
2. Use your pension allowance
You get to put £40,000 in to your pension whilst getting tax relief. You can put more in but you would not get tax relief.
The £40,000 is you and your employer combined.
If you're in a position to do so, consider reducing your tax burden by contributing to your pension up to the £40,000 mark.
The annual allowance can be carried forward by three years so also consider your situation from previous tax years too.
If you're looking to open your own SIPP, check out our SIPP guide.
3. Use your capital gains ("CGT") allowance
You get a CGT allowance of £12,300 for this tax year. That means you can make £12,300 of gains on things like investments (that sit outside tax-favourable wrappers like an ISA) without any tax being incurred.
Many people don't think ahead when it comes to selling their investments and get caught out.
Instead, with some decent planning, you could unlock £24,600 of money tax free by making a sale just before tax year end and then another sale literally the next day once we are into the new tax year and you get a fresh £12,300 allowance.
This is particularly relevant for anyone who had an unexpectedly good investment where they are sat on large paper gains (I see you, crypto folks).
There we have 3 easy, actionable tax year end tips. Now go and sort it out!
Mohsin is the co-founder of IslamicFinanceGuru, Oxford graduate and a Forbes 30 under 30 alumnus. He's a former corporate lawyer at one of the world's largest US firms. Whilst running IFG, Mohsin is also actively interested and invested in the web3/crypto space.
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