Unbiased<\/a>, said the increase in the state pension is creating a problem for many people.\n<\/p>\n\n “For millions of retirees, the latest increase in the state pension is a double-edged sword.\n<\/p>\n
\n “While the ‘triple lock’ is doing its job by protecting the value of pensions against inflation, the government\u2019s decision to keep the personal tax allowance frozen at \u00a312,570 is creating a ‘stealth tax’ trap.\n<\/p>\n
\n “As the state pension rises to meet the cost of living, it is consuming more and more of that tax-free buffer. For many, this means that even a modest private pension or a small amount of part-time work could now result in an unexpected tax bill.\n<\/p>\n
\n “If you’re unsure, seek help from a professional financial adviser who can help clarify your position, reduce uncertainty, and plan with greater confidence.”\n<\/p>\n
\n At the same time, savers and workers are being warned they could miss out on up to \u00a31,500 by not using key tax-free allowances before the deadline.\n<\/p>\n
\n Here are four allowances to check now.\n<\/p>\n
ISA allowance<\/p>\n
\n You can save up to \u00a320,000 per year in an ISA without paying tax on interest, dividends or capital gains.\n<\/p>\n
Covers Cash ISAs, Stocks and Shares ISAs or a mix<\/p>\n
Returns are completely tax free<\/p>\n
Allowance resets on April 6<\/p>\n
\n For example, \u00a320,000 saved at 5 percent interest could earn \u00a31,000 tax free.\n<\/p>\n
Capital Gains Tax allowance<\/p>\n
\n You can make up to \u00a33,000 in profit from selling assets tax free.\n<\/p>\n
Applies to shares, crypto and second properties<\/p>\n
Not applicable to your main home<\/p>\n
Tax applies above the threshold<\/p>\n
\n Rates above the allowance are 18 percent for basic rate taxpayers and 24 percent for higher rate taxpayers.\n<\/p>\n
Dividend allowance<\/p>\n
\n If you own shares, you can earn up to \u00a3500 in dividends tax free each year.\n<\/p>\n
Applies to income from investments<\/p>\n
Tax rates depend on your income band<\/p>\n
Allowance has been reduced significantly in recent years<\/p>\n
\n Even small portfolios can exceed this limit, leading to unexpected tax.\n<\/p>\n
Personal savings allowance<\/p>\n
\n You can earn interest on savings tax free depending on your income.\n<\/p>\n
Basic rate taxpayers get \u00a31,000<\/p>\n
Higher rate taxpayers get \u00a3500<\/p>\n
Additional rate taxpayers get no allowance<\/p>\n
\n However, rising interest rates mean more people are now exceeding these limits.\n<\/p>\n
Why more people are paying tax on savings<\/p>\n
\n Frozen thresholds and higher interest rates are pulling more savers into paying tax, a process known as fiscal drag.\n<\/p>\n
\n For example, \u00a320,000 saved at 4.58 percent earns around \u00a3916 in interest each year.\n<\/p>\n
\n This exceeds the \u00a3500 allowance for higher rate taxpayers.\n<\/p>\n
\n Similar savings in an ISA would be tax free.\n<\/p>\n
\n Research shows over a third of people have never heard of the personal savings allowance, while billions have been paid in tax unnecessarily over the past decade.\n<\/p>\n
\n Recommended reading:\n<\/p>\n
What to do before April 5<\/p>\n
\n With the tax year ending soon, acting now could protect your savings and reduce your tax bill.\n<\/p>\n
Use your full ISA allowance before it resets<\/p>\n
Review savings and investments for unused allowances<\/p>\n
Consider moving savings into tax efficient accounts<\/p>\n
Check if rising income could push you into paying more tax<\/p>\n
\n Financial experts say taking action now can help avoid unexpected bills and make your money work harder.<\/p>\n","protected":false},"excerpt":{"rendered":"The issue comes down to the frozen personal allowance, which remains stuck at \u00a312,570. As the state pension…\n","protected":false},"author":2,"featured_media":509840,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":["post-509839","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-personal-finance","tag-personalfinance","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/509839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=509839"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/509839\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/509840"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=509839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=509839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=509839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}