7 tax allowances to remember to take advantage of this tax year-end
1. Make the most of your clients' Personal Income Tax Allowance
The standard personal Income Tax allowance for tax year 2024/25 is £12,570. To receive the full allowance, your client should have a tax code of 1257L. However, this may be different if your client has been given a different tax code by HMRC, such as:
NT = no tax payable
0T = no personal allowance
BR = basic rate (all taxed at 20%)
D0 = All taxed at higher rate (40%)
D1 = all taxed at additional rate (45%)
1383M = enhanced due to receiving marriage allowance of 10% from partner
1131N = reduced allowance due to giving marriage allowance of 10% to partner
K123 = negative tax code as they owe tax or have benefits in kind
Where a client takes a tailored drawdown income or an UFPLS payment, part of this (usually 25%) will be tax-free and the rest will be subject to income tax.
For example, an UFPLS payment of £16,760 will be made up of £4,190 (25%) Tax-Free Cash and £12,570 taxable income. Provided that no other income has been taken in the tax year, the whole payment should therefore be free of tax.
2. Make the most of your client's Annual Pension Contribution Allowance
Has your client made the most of their Annual Allowance this tax year? Please see our cut-off dates for pension payments here.
The contribution Annual Allowance for this tax year is £60,000 and the Money Purchase Annual Allowance (MPAA) is £10,000 where the member has already flexibly accessed benefits from any of their pensions.
Provided that they have sufficient Annual Allowance (see also Carry Forward below), members can pay up to 100% of their taxable earnings as a contribution and receive tax relief on it. If they have no earnings, they can still pay up to £2,880 as a net contribution and this will have tax relief added to bring it up to £3,600 gross.
We can provide you with a list of existing 7IM SIPP clients who have remaining contribution allowances for the current tax year. And note: we prefund tax relief so it is invested the same day we invest the client’s contribution.
3. Carry Forward unused allowances
If your clients have been unable to make full use of their contribution allowances over the previous three tax years, they might be able to benefit from making a larger contribution in the current tax year. For more information, please see HMRC Carry Forward rules.
4. Junior SIPPs – a very long-term present
Did you know you can open Juniors SIPPs via the 7IM Platform for your clients’ children? While saving for the children’s retirement might not sound like the most exciting thing to do, it can give a huge boost to their retirement savings. Currently you can save up to £3,600 into a child’s Junior SIPP. And like a regular pension, the government will also provide tax relief of 20% on contributions. Find out more on our Junior SIPP information page.
5. ISAs – use it or lose it
With a £20,000 allowance each tax year, ISAs continue to be one of the most tax-efficient ways to save as they allow clients to earn interest or grow their investments free of tax, and withdrawals don’t suffer any capital gains or income tax. 7IM ISAs are flexible and any cash withdrawn can be reinvested during the same tax year.
ISA allowance reports are available to check how much allowance remains for your client. We also have the Bed & ISA tool where you can sell from the GIA, move cash into the ISA and reinvest all on one page. For more information please click on our ISA information page.
6. Junior ISAs
A Junior ISA (JISA) is a great way to help your clients’ children (or grandchildren) build their wealth. Like the adult version, there’s no tax to pay on any interest or returns within a JISA. The JISA annual allowance currently stands at a generous £9,000, and while an account can only be opened by the child's parents or legal guardians, anyone can pay into it. It’s worth remembering that while the money can’t be touched until the child turns 18, as soon as they hit this momentous age, they have full control over the money. For further details, please visit our Junior ISA information page.
7. Managing Capital Gains Tax using the 7IM Platform
This tax year’s capital gains tax (CGT) allowance is down at £3,000 per individual. We have a range of reports and tools available on platform to help you manage your clients’ CGT allowance. You can download a CGT summary report from the 7IM Platform covering all your clients: Reports > Tax > CGT Reports > All Clients CGT Report
Other important tax year-end information
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