EP 52- Financial Independence Series : End of Tax Year Considerations

There are factors to consider within the End of Tax Year which is a very critical discussion for investors and business owners.

The ISA (Individual Savings Account)

Each tax year you have a 20,000 pounds tax free allowance that you can put into either a cash ISA, or a stocks and shares ISA. You can have more than one ISA. You could have some in cash, you can have some stocks and shares, as long as the total in that particular tax year is no more than 20,000. You also have the option to convert your cash into stocks and share ISAs and vice versa.

The benefit of reverting stocks and shares of cash ISAs into stocks and shares ISA means that you’re not just letting it sit in your bank account whilst inflation is currently skyrocketing. This means your money is being invested into a pension or German investment account.

Stocks and shares ISAs have a five year horizon. So the investment strategies can be slightly shorter.

The Pensions 

Pensions are investments that have the same risk, the same sort of portfolios. But there’s different tax advantages to pensions in regards to the end of tax year. Everyone has a pension allowance each year. And it does depend on your employment status as to how much you can pay into that pension allowance if you’re employed as a sole trader, or a limited company.

As a general rule people can pay up depending on how much they earn up to 40,000 per tax year into a pension. The difference with business owners is that the profits are sitting in the business, they might have more than 40,000. And they can actually use a carry forward allowance, and potentially put a large lump sum into their pension as an employee of their business. 

With pensions, you can also get tax relief. So you can get 20% tax relief. It’s basically free money given by the government.

Retirement ages are increasing. From 2027, the retirement age goes from 55, where you can access money with a 25% tax free lump sum to age 57. So they’ve extended that if you do not reach your 55th birthday in 2027, then it would mean that that would have to be 57, not 55 At the point where you can start drawing on most pensions that are set up these days in the last sort of five to six years.

If you’re employed, and you’re paying into a workplace pension, you might have some personal money, but you can still pay into a personal pension. And you can do that before the end of the tax year. 

If you’ve had an inheritance, usually, if there’s a bonus through work, you would pay that into your workplace pension. So it’s checking what you’re paying in.

Bottom line is whether ISAs or investments, make sure your goals are being achieved and that you are doing enough on the gaps in putting yourself in a better position.

If you want to discuss any of this in more detail please do get in touch with me. Or if you are looking to have any regulated financial advice then do check out my other business. You may check out my books on Amazon, which is the wealth accelerator planner like a journal actual diary planner. And then 10 ways to accelerate your wealth, which is all about how you can accelerate your wealth.

Also, I’m going to be running a webinar in a couple of weeks-time so you are most welcome to join and learn more about end of year tax. Just visit this link to sign up.

If you would like to hear the full podcast please click here.

Leave a Comment

Your email address will not be published. Required fields are marked *


We will not share your contact information with any third parties. Unsubscribe at any time. You are welcome to read our Privacy Policy for further information.

Want to know how Evolution Financial Planning makes ethical investment effortless?

Sign up to the Cash Flow Projector

Make it.. Manage it...Grow it!

Sign up to the Wealth Accelerator Programme

Make it.. Manage it...Grow it!

Sign up to the Wealth Accelerator Challenge

Make it.. Manage it...Grow it!

Sign up to the Wealth Hub Membership

Make it.. Manage it...Grow it!