There was a lot of speculation on how the Autumn Budget 2024 would change the UK tax rules. There were surprisingly no changes made to the allowances, so here is a reminder of the allowances available to you in the 2024/25 and 2025/26 tax years.

There are never any guarantees that the tax allowances will be around forever, so we recommend using them if you can.

Capital Gains Tax (CGT)

Chancellor Rachel Reeves has maintained the reduced CGT tax-free allowance of £3,000 for the 2024/25 and 2025/26 tax years. If you are sitting on assets that are subject to gains, you may want to take advantage of the £3,000 allowance before the end of the tax year.

What did change was the amount of tax payable on gains above the allowance from 10% and 20% to 18% and 24%. Any disposals made after 30 October 2024 would be subject to the higher rates.

Fill up your ISAs

The ISA allowance for the 2025/26 tax year stays at £20,000 and at £9,000 for Junior ISAs.

ISAs provide a simple, tax-free wrapper for investments. Once the money is inside, they are free from Capital Gains Tax and Income Tax forever.

Even if built up slowly, the long-term benefits of ISAs add up; especially for generating a tax-free income in retirement.

Younger savers can also have Lifetime ISAs which have an annual allowance of £4,000 which receives a bonus of 25% (up to £1000).

Don’t forget your pension

Pensions flexibility rules have made a big difference, and the tax relief on pension contributions can boost investments.

For a basic rate taxpayer, investing £1,000 into an ISA requires £1,200 salary before income tax (plus National Insurance). To put £1,000 into a pension costs just £800 as £200 tax relief is added.

For a higher rate taxpayer, the net contribution is effectively £600 as £200 is given as relief through your tax return.

If your adjusted earnings are going to exceed £100,000 this tax year, then you will also start to lose your Income Tax Personal Allowance of £12,570 and if you have a young family, you also lose the free child-care allowance.

Increasing your salary sacrifice pension contribution with your employer scheme or adding contributions to a personal scheme can keep your income below the threshold to maintain these benefits whilst they are of value to you and your family.

Any questions? – If you want help or advice on the best options for you, speak to the team here at Raymond James, Hitchin. Remember, tax treatment depends on individual circumstances and may be subject to change in the future.

Did you know???

You don’t have to receive taxable income to benefit from tax allowances. Any adult or child resident in the UK can qualify for a full or Junior ISA.

This also applies to pensions. If you are not receiving taxable income because you are under 18, unemployed and under state retirement age, the maximum tax allowance is £3,600 gross (£2,800 net).