FOMO – Fear Of Missing Out

With the end of the tax year approaching FOMO might not be a phrase that would spring to mind, but with a number of allowances being time critical, FOMO is exactly what you should be thinking.

The obvious one is your ISA allowance. You can add up to £20,000 into an ISA each tax year, whether this is into a cash ISA or investment ISA helping to provide you with a tax-free return. Whilst cash savings rates aren’t great at the moment, an Investment ISA is protected against Capital Gains Tax on growth, or income tax, from income withdrawals. This is a benefit you don’t want to miss! The ISA allowance is a ‘use it or lose it’ allowance, so if you don’t put money in before 5^th April, you have unfortunately lost that opportunity forever.

Pensions also have allowances and for the end of the tax year, most people can add £40,000 each year into their pension if their earning supports this (some high earners may have a reduced Annual Allowance). If you are a higher-rate tax payer, not only do you get 20% of your contribution added to the pension, but you can reduce your tax liability by a further 20% of your contributions for each tax year.

If you need assistance with these calculations, be sure to give us a call.

Most pension contributions are made on a monthly basis, but there is nothing to stop you at the end of the tax year adding a lump sum to your pension, therefore boosting your retirement savings and reducing your tax bill – something most definitely not to miss out on!