With the end of the tax year looming on the 5th of April 2016, now is the time to put your personal finances in order. Craig Hendry of Johnston Carmichael Wealth Ltd sets out some useful tips on how you can make full use of the available tax allowances and also implement other basic tax planning measures to make the most of your savings.

1. Use the Individual Savings Account (ISA) allowance

The ISA limit for 2015/2016 is £15,240. You can invest £15,240 into a Cash ISA or £15,240 into a Stocks and Shares ISA, or you can have a combination of the investment into Cash and Stocks and Shares. If you have a combination there are no maximum or minimum amounts into each segment as long as the total does not exceed £15,240.  If you want to save for a minor then the Junior ISA limit in 2015/2016 is £4,080. You need to use the ISA allowance for this tax year before 5th April 2016. Any savings into an ISA are exempt from tax, which means you receive all the interest or growth with no tax due. You need to sit down and decide what it is you would like to achieve from these investments and when you might wish to access them. Then you can start to build an appropriate investment strategy.

2. Build up emergency savings

Before locking your money away in a high rate deposit account (which is currently not very high) or savings product, build up at least three to six months’ worth of salary in an easy access account. This way, you’ll always have money available in an emergency.

3. Little and often

Not everyone is fortunate enough to have large deposits, so save on a regular basis by setting up a monthly direct debit into a savings account or ISA just after you’ve been paid. This gets you in the saving mind-set and builds up your savings gradually in a manageable way.

4. Watch out for penalties

Some accounts have limits on the number of withdrawals you can make and others penalise you for making withdrawals by imposing an interest penalty. They may also pay a bonus but watch as this may drop after a withdrawal is made.

5. Diversify

Use collective funds such as unit trusts or investment trusts to spread your risk across different asset classes such as stocks and shares, fixed interest and property. These funds do involve some risk and you should be clear on your capacity to accept any potential short term losses should their value drop.

6. Make use of the Capital Gains Tax annual exemption

You can realise gains of up to £11,100 per person in the 2015/2016 tax year without paying Capital Gains Tax so, again, utilise this exemption if possible.

7. Switch your investments to tax free ISA’s

If you have a portfolio of investments with some gains, then consider crystallising some of these gains and immediately re-investing them back into an ISA if you have not already used your ISA allowance for the tax year. Keep any gains within the CGT allowance for 2015/2016 of £11,100.

8. Pension contributions

If you don’t have a pension, then start making contributions into either your employer’s pension scheme or your own personal pension plan. Contributions attract 20 percent tax relief for basic rate and non-taxpayers, with higher rate taxpayers being able to claim a further 20 percent or, in some cases, 25 percent relief through their tax return.

9. Use the spouse’s allowance

Transferring any income-bearing assets to lower earning spouses can help to share the tax burden. This is particularly relevant if the spouse does not use his or her personal allowance - which has increased from £10,000 to £10,600 in this tax year - or their basic rate tax band which is up to £31,785.

10. Tax Efficient Investments

Investments such as Venture Capital Trusts and Enterprise Investment Schemes might be worthy of consideration to sit alongside pension and ISA funds for those who may be willing to accept higher risk in return for income, capital or inheritance tax reliefs. Whilst they potentially do not suffer the same restrictions in terms of access in the way that pension funds do, they do provide clients with another potential retirement strategy. These are higher risk investments and as with all investments professional advice should be taken before proceeding.

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You should always seek independent advice before making any investments. Please remember the value of investments can go down as well as up and you may not get back the amount you originally invested.

The information provided in this document is based on Johnston Carmichael Wealth Ltd.’s understanding of current legislation which may be subject to change. Johnston Carmichael Wealth Ltd is authorised and regulated by the Financial Conduct Authority. Registered in Scotland No. 81852 Registered Office, Commerce House, South Street, Elgin, IV30 1JE.