The Covid-19 pandemic forced many clients to tweak their financial affairs this year. So, what planning opportunities are there ahead of the end of the 2020/21 tax year?
What if clients…
1 Realised a portfolio loss
Markets saw unprecedented volatility in 2020. Global stocks had the best and worst sessions in a decade on consecutive days. If a client has realised capital losses on their investments this tax year which are more than any chargeable gains, they can carry forward the excess loss indefinitely to set against gains in future tax years.
2 Face redundancy or were made redundant
If any of your clients have been or could be affected by redundancy, there may be a couple of considerations.
If they can, clients could use part of their taxable redundancy payment to make pension contributions. Or, if their employer agrees, they could give up some of their redundancy payment as an employer contribution to their pension (redundancy sacrifice).
They could also place some of a payment into a Cash ISA to avoid attracting further income tax liabilities while they sort out their affairs or secure another role.
3 Dipped into their ISA
Clients may have taken some money out of their ISA this tax year. However, if an ISA is ‘flexible’, it can be put back in before the end of the tax year and still benefit from the tax advantages.
4 Stopped pension contributions
The unique circumstances presented by 2020 may have prompted some clients to halt or lower their pension contributions. If they can, and subject to the tax relief and annual allowance rules, clients could catch up on ‘missed’ contributions by either increasing their remaining regular contributions, or making a single contribution.
The same principle applies with ISAs.
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