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New Tax Year

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The Individual Savings Account (ISA) allowance for the 2012-13 tax year is £11,280 and can be taken up now. Up to half of the total (£5640) can be put into a cash ISA. Up to £3600 can be paid into a Junior ISA.

The cash ISA gives the benefit of tax free interest. Check the rates on offer and take note of the terms offered. If you have cash ISAs accumulated from previous years, have you checked that the rates are still competitive? It may be better to transfer savings to a different ISA. Check out the best cash ISA rates with Which? or other online comparisons.

A ‘stocks and shares’ ISA offers a shelter from capital gains tax and from further income tax on dividend income. There are thousands of options for investment so it pays to take advice as to which funds may be most suitable for you. You may also have ISA investments from earlier years that would benefit from a review.

Pensions: It is no longer possible to contract out of State Second Pension via a money purchase pension scheme. Contracting out remains possible with Defined Benefit (eg ‘Final salary’) schemes. Pension provision and retirement planning should be reviewed regularly to avoid financial shocks close to retirement!

Tax rates: The personal income tax allowance is raised to £8105 subject to the income limit of £100,000. The higher rate tax threshold is reduced bringing more taxpayers into the 40% band. For further details see the HMRC website. The capital gains tax annual exempt amount is held at £10,600.

Child Benefit and Tax Credit : for details of the changes see the explanation by Which?

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