Unused tax allowances

Did you blink and miss the end of the tax year last week? If the answer is yes, you’ll be pleased to hear the unused part of some tax allowances can be rolled into the following year, so you may still be able to use them.

Which ones can be carried forward?
The main ones are the £3,000 annual gift allowance for inheritance tax (IHT) and the £40,000 allowance for pension contributions.

How is it done?
If you don’t use the £3,000 gift allowance, you can add it to the allowance for the following year. This means that in year two you can gift up to £6,000. Pat Mock at the accountants Deloitte said: “If it is not used in year two, however, the allowance is lost.”

What about pensions?
Any unused allowance for pension contributions — up to £40,000 a year for most people — can be carried forward for up to three years. To qualify, you must have been a member of a registered pension scheme in those years.

What else can be rolled over?
Capital losses can be carried forward indefinitely and set against gains when they arise. Certain losses, such as on property income, can be carried forward against future income from the same source.

Top tip
Higher-rate taxpayers can offset the higher-rate element of gift aid donations against tax paid in the previous year. Say you donate £80 to a charity, which claims basic-rate tax of £20 from the Treasury, bringing the gift to £100. You can claim the additional 20% — a further £20 — against tax you are due to pay in the year the gift is made or to reclaim tax you have paid in the previous year.