Personal tax planning for 2021/22
The dividends allowance remains at £2,000 for 2021/22. Factoring in the slight increase to the personal allowance in 2021/22 from £12,500 to £12,570, the maximum tax-free income you can receive through dividends is £14,570.
Capital Gains Tax
Assets that are sold in 2021/22 for more than £12,300 will be liable for capital gains tax. The rate of tax paid will depend on the type of asset sold and which marginal rate of income tax you pay, with different rates applying to basic-rate taxpayers and those in higher or additional-rate bands. That is unless the asset is held in trust, in which case capital gains tax kicks in at 28% on gains from residential property or 20% for gains from other chargeable assets worth more than £6,150.
The most you can save into your pension pot in 2021/22 – otherwise known as the annual pensions allowance – remains £40,000, although personal circumstances can mean the actual allowance is lower for a particular individual. You can contribute more by utilising any unused allowance from the previous three tax years.
ISAs remain tax-free up to an annual subscription value of £20,000, whether the income is from interest or investments.
Estates worth less than £325,000 will be tax-free, while the flat-rate of inheritance tax above this threshold remains at 40%. The final increase to the residence nil-rate band took place in 2020/21, making it possible to protect a further £175,000 when passing on the family home to direct descendants, such as children or grandchildren.
If you would like some advice or have any questions, please contact us on 01732 838877.