Apr 2022

Use it or lose it – don’t let this year’s tax allowances go to waste

The UK tax year starts on the 6th April each year, and ends on the 5th April the following year – which means that when the clock strikes midnight on the 5th April 2022 you will lose any unused allowances from the year before.

You can utilise the allowances at any point throughout the financial tax year, and most do, but if you’re reading this and you haven’t, there is still time to do something about that and here is a summary of the key allowances you could and should consider:

Individual Savings Account (ISA)

In simple terms ISAs are savings accounts in a ‘tax wrapper’ because there is no tax payable on interest or investment gains.

The total amount you can save into ISAs in the current tax year is £20,000. This is known as the ISA allowance. You can use an ISA to save cash or invest in stocks and shares. You can pay your whole allowance into a Stocks and Shares ISA, into a Cash ISA, or any combination of two.

You can start a Cash ISA from age 16 and a Stocks and ISA from age 18.

You cannot carry forward any unused ISA allowances, so use it, or you will lose it.

Junior Individual Savings Account (JISA)

Junior ISAs let you save and or invest on behalf of a child. A child’s parent or legal guardian must open the Junior ISA, but the money in the account belongs to the child. They can start managing their account on their own from age 16 but can’t withdraw funds from it until they turn 18, apart from in exceptional circumstances.

The Junior ISA limit is £9,000 for the current tax year. Parents, friends, and family can all save on behalf of the child as long as the total stays under the annual limit. You cannot carry forward any unused JISA allowances, so again, use it, or you will lose it.

No tax is payable on interest or investment gains.

When your child turns 18, their account is automatically rolled over into an adult ISA.


In simple terms a pension is a long-term savings plan with a tax uplift on money paid in.

The amount you can pay into a pension and benefit from tax relief is based on your earnings and how much tax you pay. The general rule is that you can contribute up to 100 per cent of your earnings, with tax relief applying on contributions of up to £40,000 per tax year.

When calculating your pension input, you should include any gross personal pension contributions (ie. the contribution you make, and the tax relief applied by the government), any employer pension contributions, and any third-party contributions made in this tax year.

Unlike ISAs, you can carry forward any unused pension allowances from the three previous tax years.

You can even contribute to a pension if you don’t pay tax or have any earnings at all. The annual pension contribution limit for non-earners is £3,600 gross (£2,880 net), allowing you to accumulate pension funds regardless of earning status, and importantly still qualifies for that tax relief uplift.

For high income individuals the annual allowance of £40,000 is tapered. The tapered annual allowance limits the amount of tax relief high earners can claim on their pension savings by reducing their annual allowance to as low as £4,000. **Don’t be caught out by the tapered annual allowance, if you are a high earner do some research or better still raise this with your accountant or financial planner – ideally both, and they will advise whether this impacts you and what action, if any is required. **


For the 2021/22 tax year; the first £2,000 you receive in dividends is tax-free, but after that you’ll be taxed according to your Income Tax band: 7.5% if you pay at the basic rate, 32.5% if you pay at the higher rate and 38.1% if you pay at the additional rate.

From the 6th April 2022, Dividend Tax is set to increase by 1.25%, so now could be the time to make some changes to how you manage your company shares or share portfolio.


You have a £3,000 per person, per annum ‘gift allowance’. This is known as your annual exemption. This means you can give away assets or cash up to a total of £3,000 in a tax year without it being added to the value of your estate for Inheritance Tax purposes. You can make gifts worth more than the £3,000 allowance in any tax year, but they might be subject to Inheritance Tax in the event of your death.

Any part of the annual exemption which isn’t used in the tax year can be carried forward to the following tax year. It can only be used in the following tax year and can’t be carried over any further.

If you’re thinking about gifting money to your family or friends, it’s very important you make a record of; what you gave, who you gave it to and when you gave it. This will make it easier for the executor of your estate to work out during probate what parts of your estate are liable for tax.

If you are considering tax year end planning and haven’t started, again I urge you not to leave it to the last minute, if you want to use it, you could still lose it, if the funds aren’t received before the deadlines imposed by your investment or pension provider.

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