Using the tax year end to support your long term plans

Tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances. The tax treatment of the investment is that applying under current legislation and can change. The value of investments can fall as well as rise, and you may not get back the full amount you invest. Eligibility criteria, fees and charges apply.

Taking stock of your wealth and where you are on your journey is always important but with the end of the tax year fast approaching, it’s particularly timely to take a look at how your plans are progressing.

Whether your priorities are developing a long-term legacy or simply making sure your financial housekeeping is up to date, here are some of the ways Coutts can help you make a difference.

Considering how much of your  wealth will transfer to the next generation is a key component of financial planning. Inheritance tax (IHT) means your family could pay up to 40% in tax on any inheritance they receive above £325,000. To help them, you may want to consider tax-efficient gifting – up to £3,000 per tax year. You could make this gift before 5 April 2025 if you haven’t done so already, and then again in the new tax year.

You could also carry your gifting allowance forward for one year if you didn’t use it in the last tax year. Even if you pass away within seven years, this gift will not be subject to IHT.

It’s worth noting though that the recipient of the gift has full control of the money once they have received it. Before sending the gift, you may want to consider reviewing your will and understand how much of your estate is liable for IHT. 

If a family member is getting married or celebrating a civil partnership, then this circumstance allows you to gift even more. Up to £5,000 to a child, £2,500 to a grandchild or great grandchild, or £1,000 to any other person. This does not affect your other gifting allowance.

Our team of specialists are also on hand to support you in other areas of estate planning, such as writing a will or setting up trusts for your family members.

Please note, we do not offer tax advice, so please speak to your accountant if you are unsure about how much you can gift tax free. 

ISAs

An individual savings account (ISA) allows you to shelter money from UK income tax and capital gains tax (CGT) for both you and your children.

You have until 5 April 2025 to use any remaining ISA allowances in the 2024/25 tax year. Deadlines to contribute into Coutts ISAs online within the 2024/25 tax year can be found in the relevant sections below.  

Junior ISAs

A tax efficient way to support the next generation is to put up to £9,000 each tax year into a Junior ISA for your child or ward if you’re a guardian. Both the money you set aside, and the money returned from the Junior ISA would be free from UK income tax and CGT.

We offer a Junior Stocks and Shares ISA, which invests your money and gives it the opportunity to grow towards your child’s future. Our in-house investment experts built and manage five ready-made funds to pick from based on your risk preferences. Choose from cautious investments (weighted more to government bonds) through to more ambitious investments designed for greater growth but which come with more risk (weighted to equities).

To set one up with us, the beneficiary must be under the age of 14. The money in the Junior ISA belongs to them and, until their 18th birthday, no withdrawals can be made. When your child turns 18 they can access their money. However, if you’re planning for the long term – perhaps hoping the Junior ISA contributes to their first property deposit – it may be advisable to leave it invested for as long as possible for greater potential growth.

To invest with a Coutts Invest Junior ISA within the 2024/25 tax year, online requests must be completed by 8pm on 4 April 2025.

Cash ISAs

Cash ISAs are one method of using your £20,000 personal annual allowance to gain regular interest on your deposited cash. We offer a variable rate Cash ISA where the interest moves with the Bank of England base rate. It is an instant access account so it comes with the benefit of being able to withdraw and contribute whenever best suits you.

To save into Coutts Cash ISA within the 2024/25 tax year, online banking and app requests must be completed by 5pm on 4 April 2025.

Stocks and Shares ISAs

Alternatively, for longer-term planning, it’s worth considering a Stocks and Shares ISA. They allow you to put up to £20,000 a year into investments, which offer the potential for greater growth than cash ISAs over the longer term. The money you invest and any returns made are free from CGT and UK income tax. Your money can be withdrawn at any time, but there may be a delay between your investments being sold and your money coming into your designated account.

One thing to keep in mind is that, if you’re saving for goals five or more years away, it’s wise to have at least four months’ worth of living costs saved as a safety net before starting to invest.

To invest with a Coutts Invest Stocks and Shares ISA within the 2024/25 tax year, online requests must be completed by 8pm on 4 April 2025.

Even with the recent changes in the autumn budget, pensions are a key part of any financial plan, helping you manage your taxes and save for the future.

Maximising pension contributions gives you tax benefits like government contributions and tax relief, which could improve your retirement lifestyle. To assist with saving for your retirement, the government provides additional funds whenever you contribute to your pension. This benefit is known as pension tax relief. The specific amount of tax relief you receive depends on the rate of income tax you pay.

You could make regular contributions or a one-time payment each tax year. For the 2024/25 tax year, the pension annual allowance is £60,000. You can access your pension when you’re 55, which will increase to 57 in April 2028.

For investments into a Coutts Invest Pension within the 2024/25 tax year, online requests must be completed by 5pm on 1 April 2025.

You must be over the age of 18 and under the age of 75 and be a UK resident for tax purposes. When transferring any existing pensions, exit fees may apply.

If you are a higher or additional rate taxpayer

Higher rate taxpayers are eligible for up to 40% tax relief. This means a £10,000 pension contribution could effectively cost £6,000. Additional rate taxpayers can receive up to 45% tax relief. The earlier you start, the more time and opportunity your investments have to grow – potentially giving you a larger pot for retirement. 

Pension carry forward is worth considering

Unlike ISAs, it might be possible to use some of your pension allowance from previous years if you haven’t maximised your contributions. This is called ‘pension carry forward’.

You could aggregate any unused pension allowance from the previous three years. Your accountant should be able to help calculate your total allowance for this tax year to ensure you haven’t lost out on any tax relief from previous years.

Business owners

If you’re a business owner, you may not have invested into a pension having focused on utilising cash flow to develop your business. However, by funding a pension, you could take advantage of the tax benefits, reducing your tax bill and the potential to have a meaningful retirement fund when you decide to stop working.

If you haven’t had the time to plan efficiently for the retirement you want then don’t worry, we’re here to help. Speak to your private banker today.  

To invest with a Coutts Invest Pension within the 2024/25 tax year, online requests must be completed by 5pm on 1 April 2025. 

For additional information, or to discuss application dates and cut off times to qualify for the 2024/25 tax year, please speak to your private banker.