It’s that time of year again…the run-up to the tax year end on 5th April 2020 provides an opportunity to finalise your affairs for the 2019/20 tax year. The recent general election meant the usual Autumn budget was deferred from October and is now scheduled to take place on 11th March 2020. We will of course write separately covering any changes that may have implications for investors. In the meantime, we outline below the easiest ways to ensure your finances are managed tax efficiently:


The ISA allowance of £20,000 per tax year provides a great opportunity to move funds into a tax-free environment. This can be funded from cash or by recycling investments in your investment account, potentially also utilising part of your Capital Gains Tax allowance.

A Flexible ISA also allows you to replace any funds withdrawn within the same tax year without it counting as part of the annual allowance.

Finally, you could also make provision for children under 18 using the Junior ISA. You can contribute up to the £4,368 allowance annually. You give away all access to the funds, though retain control over the investment. Once the child turns 18, these accounts turn into normal ISAs and become the children’s outright.


Pensions are extremely tax efficient, generally benefitting from; tax relief on the contribution (of up to 45%, 20% upfront with the balance claimed via your tax return), tax-free growth, 25% tax-free cash entitlement on retirement and exemption from your estate for IHT purposes.

Current UK legislation allows you to contribute up to 100% of your UK earnings each tax year and receive tax relief, up to the annual allowance of £40,000. Unused allowance from the preceding three tax years can potentially be “carried forward”.

However, there are complexities with pension regulations including reduced contribution allowances for those who have drawn income from their pension benefits (Money Purchase Annual Allowance) and those whose income exceeds £150,000 (Tapered Annual Allowance). Those with larger pensions must also be wary of exceeding the Lifetime Allowance (currently £1.055M). Given these complexities, it is therefore crucial you seek advice to ensure you benefit from the expected tax efficiencies.

Capital Gains Allowance

Capital Gains Tax (CGT) is payable on your total capital gains above the tax-free allowance of £12,000. The CGT rate on investments is 10% for basic rate and 20% for higher rate taxpayers. For properties other than your primary residence, the rate remains higher at 18% and 28% respectively. Using your CGT allowances annually can save tax on investments of up to £4,800 for a couple liable to higher rate tax, enabling portfolio rebalances and potentially releasing funds to utilise ISA allowances.

Charitable Donations

Philanthropic donations benefit both the donor and recipient. Many people are familiar with Gift Aid, but even more efficient is the gifting of investments. The donation is deducted from your taxable income, exempt from CGT and is immediately outside of your estate for IHT purposes.

Inheritance Tax

You are able to gift up to £3,000 annually which is exempt from IHT. Once the current year’s allowance has been used you can carry forward any unused exemption from the previous tax year, enabling a gift of up to £6,000. Gifts out of surplus income are also exempt provided they meet certain criteria.

Personal Allowance

Those with annual income falling between £100,000 and £125,000 suffer an effective tax charge of 60% due to the loss of your tax-free personal allowance. Making pension contributions or charitable gifts can reclaim the personal allowance by adjusting your effective income.

VCT and EIS Investments

A further, higher risk option to potentially consider once other allowances are used are Venture Capital Trusts, Enterprise Investment Schemes and Seed Enterprise Investment Schemes. They offer substantial tax incentives to encourage investment into small companies. On top of income relief of 30% (50% for SEIS), VCTs benefit from tax-free dividends, while EIS’s shelter CGT and are IHT efficient once held for 2 years. They are only suitable for certain investors who can tolerate high risk to their capital and are planning to invest for at least 5 years.

For more information, please contact your existing adviser or if not yet a client, contact us on: 020 7812 1460 or email

Content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. They should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.

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