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What to do before 6 April 2021: your essential six-point financial planning checklist

The countdown to the new tax year on 6 April may not have the glamour or the fireworks of 31 December; however, the repercussions of how well you plan in this period could impact how much tax you pay in years to come.

David Goodfellow, Head of UK Financial Planning at Canaccord Genuity Wealth Management, breaks down your six point checklist on what you should be doing now to make sure that you are well prepared for the new tax year:

1. Use your ISA allowance 

An ISA offers a simple, tax efficient way to invest or save. This helps to maximise your funds whilst still giving you the flexibility to access your money tax-free when you need it. If you do not use your allowance before midnight on 5 April 2021, this allowance is lost forever and cannot be reclaimed.

This tax year you can invest up to £20,000 in ISAs. You can also invest up to £9,000 per child in a Junior ISA. And if the child is turning 18 this year, they get a 'double dip' - this means they can make full use of the allowance in this tax year as well as next year's.

If you do not want to invest cash you can always look to ‘ISA protect’ investments you currently hold with these allowances.

2. Check if you could contribute more to your pension 

Pensions are an invaluable way to fund your retirement and can be an effective way to leave a legacy for your children and beneficiaries.

To give you an idea of the scale of these benefits, you can currently receive up to 45% tax relief on money going into a pension. Your pension can also pass free of inheritance tax (IHT) to your beneficiaries.

All these benefits come with restrictions on how much money you can put in and there are potential pitfalls, particularly for high earners. The end of the tax year is a crucial time to see if you could contribute more.

A key thing to check here is what your earnings have been over the tax year; if you are self-employed, this could be even more critical. The general rule is that you can contribute as much as you earn to a pension in each tax year – and receive tax relief – subject to the annual allowance (£40,000 for most people) and the lifetime allowance (currently £1,073,100).

Naturally, if your earned income is expected to decline or stop in future tax years, or if you are worried about future tax rule changes, then you might want to consider contributing more to your pension now and using your allowances. Not to mention, once the money is within the pension it grows free of income tax, capital gains tax and dividend tax.

It is worth bearing in mind that you can currently access your pension from age 55 and usually up to 25% can be taken completely tax free, but you may have to pay income tax on any withdrawals after that.

The rules around pensions are complex and we would always recommend seeking professional advice to determine what would be best for your individual circumstances. There may be alternative options to boost your retirement savings if you've maximised your pension allowances.

3. ‘Wash away’ capital gains

Individuals in the UK can realise £12,300 of gains before 6 April completely free of capital gains tax (CGT). You cannot carry this allowance forward so where possible it should be used by realising gains.

Rates of capital gains tax on assets, other than residential property, can be up to 20% on the gain if you’re a higher rate tax payer – so ‘washing away’ the gain could significantly reduce the tax liable when you need to call on your funds.

4. Think of your beneficiaries by mitigating inheritance tax (IHT)

IHT can be charged at 40% on anything above the £325,000 threshold when you die, although there could be exemptions if you qualify for the ‘residence nil rate band’ or decide to leave money to charity.

Planning sooner rather than later in this area is therefore vital if you want to maximise the amount that your beneficiaries receive. A very simple and effective way to start doing this is by using your ‘annual exemption’ of £3,000, which you can gift each tax year without any IHT implications. You can only carry forward any unused exemption for one year so acting on this before the end of the tax year is key.

Be careful though. You don't want to gift away so much it negatively impacts your own future plans. Lifetime cash flow planning is offered by professional wealth advisers and is a good way to test various scenarios to check you will still have enough to meet your own later life needs.

5. Seek further tax efficiency

For those investors who have a high tolerance to investment risk, there are attractive income tax breaks afforded to those who invest in Venture Capital Trusts (VCTs) and income, capital gains and inheritance tax breaks for investing in Enterprise Investment Schemes (EISs) (provided the underlying managers keep to certain rules). However, shares in these small and start-up businesses are highly illiquid and can be hard to sell. They are only suitable for UK resident taxpayers with a time horizon of greater than five years.

Timing these investments against the tax you pay is prudent and there are limits to how much you can invest in a tax year. Canaccord Genuity Wealth Management is able to provide specific advice in this area.

6. Speak to a financial adviser

A financial adviser is in a unique position to ensure that you are well placed to achieve your life goals and put a tailored plan in place. Where appropriate they can look to use your valuable allowances before the end of the tax year and could also open the door for you to tax efficient options such as VCTs and EISs. What is more, your initial review is completely free of cost and we will only suggest advice if we think you will benefit financially.

Contact us today on +44 20 7523 4500 or email us on for a free consultation.

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Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.

The information provided is not to be treated as specific advice. It has no regard for the specific investment objectives, financial situation or needs of any specific person or entity.

The tax treatment of all investments depends upon individual circumstances and the levels and basis of taxation may change in the future. Investors should discuss their financial arrangements with their own tax adviser before investing.

Investments in VCTs and EISs should be regarded as high risk as they invest in small companies with shares that are highly illiquid and can be hard to sell. They are only suitable for UK resident taxpayers who can tolerate higher risk and have a time horizon of greater than five years. They attract tax reliefs provided the underlying managers keep to certain rules.

The information contained herein is based on materials and sources deemed to be reliable; however, Canaccord Genuity Wealth Management makes no representation or warranty, either express or implied, to the accuracy, completeness or reliability of this information. All stated opinions and estimates in this document are subject to change without notice and Canaccord Genuity Wealth Management is under no obligation to update the information.

Photo of David Goodfellow

David Goodfellow

Head of UK Financial Planning

David specialises in financial planning and tax driven investment planning. He has over 15 years' experience in advising on and investing in VCTs, EISs and tax driven property structures, and is part of the CGWM Advice and Solutions Committee. He is a member of the Personal Finance Society and The Chartered Insurance Institute.

44 (0)20 7523 4738

IMPORTANT: Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.