Is it time to top up your Pension and ISAs?

Pensions and annual allowances

If you still have some annual allowance left over, organising the top up of your pension pot before the end of the tax year can help you benefit from additional tax perks.

You can increase, decrease, reinstate, or stop your pension contributions at any time, but we recommend you discuss your plans with your Independent Financial Adviser (IFA) who understands your circumstances. Pensions can be a complex area; getting a personalised service from your IFA can be invaluable.

The tax-free annual allowance was previously set at £40,000 a year, but the government increased it to £60,000 a year from April 2023 with this figure set to remain frozen for 2024.³ The Lifetime Allowance has also been disposed of as of April 2023.⁴ Remember, you can carry over any unused allowance from the previous three tax years, letting you pay more into your pension this year.

Individual Savings Accounts (ISAs)

The annual ISA allowance for 2023/24 is set at £20,000.⁵ If you haven’t yet used up your annual ISA allowance for this tax year you may still have time to do so. While the end of this tax year may seem far off, a mad March scramble to make use of your allowance can be stressful.

You can also divide your annual ISA allowance across different types of ISAs which include the Cash ISA, Lifetime ISA (LISA), and Stock and Shares ISA.

It’s worth remembering that your spouse or partner can also use their individual annual ISA allowance which means your combined allowances amount to a tax-free allowance of £40,000 a year.

Making the most of your annual ISA allowance is hugely beneficial in making the most of tax-free interest and consequently, tax free return on investment. But unlike pension allowances, with an ISA, you can’t carry over unused allowances from last year.

If you are considering topping up your pension in the next few months or would like help with potentially maximising your ISA, we can help.

Alternatively, email us at:

fsservice@lloydwhyte.com

What matters to you, matters to us

1. https://www.aviva.co.uk/retirement/pension-basics/changes-to-pension-age/2.

2. https://www.nhsbsa.nhs.uk/department-health-and-social-care-confirms-changes-scheme-rules-retire-and-re-join-and-partial#:~:text=Once%20the%20changes%20take%20effect%20from%201%20October%202023%2C%20it,to%20leave%20your%20current%20job.

3-4. https://www.gov.uk/government/publications/pension-schemes-newsletter-148-march-2023/pensions-schemes-newsletter-148-march-2023

5. https://www.taxrebateservices.co.uk/2023-2024-isa-allowance#:~:text=The%20ISA%20allowance%20refers%20to,previous%2022%2F23%20tax%20year

Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Calls may be recorded for use in quality management, training and customer support.