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COVID-19 (Coronavirus) – Gemini Update.

3rd June 2020

We are in unprecedented times. In line with current Government guidelines, we have taken the decision to close our offices and we are operating a working from home policy for the majority of the team.

However, to reassure you, it is business as usual!

We are still available to contact by phone and email as all our systems can be accessed and operated remotely. Face to face meetings, however, are on a strictly emergency basis only.

Indeed, it is times like these where you may need to seek additional advice from financial services professionals. Both our Wealth Managers and Estate Planning Consultants remain available to assist you and are able to offer guidance on the phone, by email or by video technology.

Please contact us FREE on 0800 255 0123 or email info@gemini-wm.com where we will do our best to assist you.

Family & Friends – If any of your family, friends or colleagues would like to seek assurance from a financial professional, please do pass on our details. Please be aware, any such introductions will be treated with the same confidence and care we give to all of our clients.

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New Tax Year

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Welcome to the new tax year and what a start it has been. Below is a breakdown of all the changes implemented in last months Budget. REMEMBER it is an ideal time with markets being low to invest, so do speak to us if you have cash available. Normally we would do tax planning throughout the year but with markets being low we want everyone to have the chance to strike whilst the iron is hot!

The value of investments and any income from them can go down as well as up and you may not get back the original amount invested.

The 2020/21 tax year started at the stroke of midnight between the 5th and 6th of April.  While many individuals leave tax planning to the end of the tax year, you can look to maximise the benefits by using your personal tax allowances* and reliefs straight away.  Please get in touch to take advantage of one or more of the following:

Income Tax

  • The tax-free personal allowance remains unchanged at £12,500.
  • Basic rate tax of 20% will be payable on income above the tax-free allowance and up to the higher rate threshold of £50,000.
  • Additional rate income tax remains the same at 45% on income above £150,000.
  • If you are married or in a civil partnership, you may be able to save money by structuring your finances as a couple to ensure you are using both spouse’s tax allowances. This could be an especially good idea if one spouse pays tax at a lower rate than the other.

ISA

  • The Junior ISA allowance has risen to £9,000 from £4,368 for children under 18.
  • The adult ISA allowance of £20,000 remains unchanged.

Pensions

  • Saving into a pension comes with great tax benefits. For a start, investments in your pension are free from Income Tax and Capital Gains Tax.
  • Depending on your type of pension, your own pension contributions (on gross contributions up to the level of your earnings (or £3,600 if more)) will also receive an automatic 20% top-up from the taxman, and higher-rate and additional-rate taxpayers can claim back another 20% or 25% through their Self-Assessment return.
  • Because of these generous tax rules, there is a limit to the amount you and your employer combined can pay into your pension without suffering a tax charge on the contributions.  This is known as the annual allowance and is currently £40,000 for most people (although this tapers down to as little as £4,000 for higher earners).
  • If you have not used your annual allowance in the last three years, you may also be able to make extra contributions by using carry forward.
  • Minimum pension contributions (paid by employers and employees) through auto-enrolment remain 8% (at least 3% from the employer with the employee making up any balance) of band earnings. Some schemes operate on a different contribution basis.
  • The lower limit of the qualifying earnings band has increased from £6,136 to £6,240. This means that where contributions are based on qualifying earnings, the first £6,240 of an individual’s earnings does not count towards auto enrolment contributions.  The upper limit is £50,000.
  • The Lifetime Allowance for pension savings has increased to £1,073,100.
  • The new State Pension, for those reaching state pension age after 5 April 2016, has increased with the full level of weekly pension now £175.20. The full basic state pension for those who reached state pension age before 6 April 2016 has increased to £134.25 per week.

Other Savings Allowances

  • The Personal Savings Allowance, which gives you tax-free savings interest, remains £1,000 for basic rate taxpayers.  This reduces to £500 for higher rate taxpayers and additional rate taxpayers do not get any allowance.
  • The tax-free Dividend Allowance remains at £2,000 (although dividends received by pension funds and ISAs remain tax-free)  

Inheritance Tax

  • Each tax year you can make a range of tax-free gifts.  These leave your estate immediately and won’t be taken into account when calculating your Inheritance Tax bill.
  • All gifts to your husband, wife or civil partner (as long as the UK is their permanent home).
  • Gifts of up to £3,000 each tax year, which can be carried over one year for a total of £6,000.  This is useful if you did not use it in the 2019/20 tax year.
  • Unlimited individual gifts of up to £250 per person.  Although not to anyone who has already received any larger gift from you.
  • Wedding gifts of up to £5,000 for a child, £2,500 for a grandchild or great-grandchild, or £1,000 to anybody else.
  • Unlimited payments towards the living costs of a child under 18 or in full-time education, elderly dependant or ex-spouse.
  • Unlimited regular gifts from surplus income that won’t affect your standard of living.
  • Gifts not covered by one of these exemptions are outside of your estate after 7 years.
  • The Residence Nil Rate Band has risen to £175,000 from £150,000.
  • This can be added to the £325,000 Inheritance Tax allowance when a direct descendant inherits a home that as, at some point, been the deceased’s main residence (children or grandchildren, not siblings).

Capital Gains Tax

  • The Capital Gains Tax allowance has increased to £12,300 from £12,000.
  • Married couples and civil partners each have their own allowance and these can be combined where assets are owned jointly.

 Landlord Mortgages

  • Landlords are no longer able to offset their mortgage interest payments against their rental income.
  • There is now only a 20% tax credit saving from a landlord’s mortgage interest.

If any of these are of interest to you, please do not hesitate to contact your Wealth Manager directly.

 

* This information is based on our current understanding of the rules for the 2020-21 tax year.

HM Revenue and Customs’ practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The Financial Conduct Authority does not regulate tax advice or estate planning

 

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