As the tax year end approaches, Steph Willcox FIA C.Act, Head Actuary, Dynamic Planner shares her short checklist that advisers should consider addressing with their clients.
Pension contributions
- Check your clients have made the most of the pension contribution annual allowance – remember they can roll over unused allowances from the past 3 years, in addition to the £60,000 limit on pension contributions (reduced if your client earnt more than £260,000 in this tax year). This includes contributions made by both your clients and their employees, as well as the tax relief automatically granted depending on the nature of the contributions (i.e. for salary sacrifice there is no additional tax relief granted as the contribution is made from a client’s gross income).
National insurance credits
- Each year, people are able to make voluntary National Insurance contributions to cover any years where they have a gap in their record. This is vital when it comes to collecting your state pension, as you need 35 years of National Insurance contributions to claim the full state pension. If your clients have has periods of time of not been in work, and not collecting child benefit, it’s likely that they will have gaps in their national insurance record. You have until 6thApril 2025 to pay voluntary contributions for the tax years 2016 and 2017, and from then on you will only be able to contribute for gaps in the last 6 years.
ISA Limits
- If your clients have maxed out their pension contributions, or they need the money to be available on a more flexible benefit than their pension, then you will want to ensure that they are making the most of their ISA limits. For the 2024/25 tax year clients are able to save:
- £20,000 in a Cash, Stocks and Shares ISA, Innovative finance ISA or Lifetime ISA (or split the limit across them)
- £9,000 to a Junior ISA
Junior SIPP
- If you have clients that have met the limit on pension contributions, ISAs and Junior ISAs you may want to consider a Junior SIPP. Each Junior SIPP has a current limit of £3,600 including the tax relief added by the government, so you can contribute £2,880 in this tax year.
