Fine-tune Your Finances

Lee Smythe provides some simple steps to financial efficiency.

With the tax year end looming on 5 April, you still have time to make your finances as efficient as possible.

First, make sure you use your annual ISA allowance, which lets you put away up to £10,200 each year with any returns (apart from equity dividends) tax free.

You can also now transfer funds accumulated in cash ISAs across to a stocks and shares ISA if you want to try to achieve better returns than the currently low cash rates.

Review your pension situation. Contributions benefit from tax relief at your highest marginal rate (up to 50 percent) and changes to the rules due from April mean that you may no longer have to buy an annuity but may be able to access the whole fund (subject to tax) at retirement.

These new rules will also see the current complicated limits on annual contributions replaced by a flat £50,000 per annum maximum – still with up to 50 percent tax relief – and the return of ‘carry forward’, which allows you to mop up your unused allowances for the three previous years.

While providing no benefit for the current tax year, moving savings to a lower tax paying spouse will save you money in the future. And make sure, for any asset disposals subject to capital gains tax, such as shares or property other than your main residence, that both spouses’ annual allowance of £10,100 is used and that any excess is allocated to the lower tax paying spouse.

Lee Smythe is Managing Director of financial planners Smythe & Walter www.smytheandwalter.co.uk