The tax year ends at the beginning of April. Our handy checklist will help you make the most of any tax savings you can make before then…
Make sure you have used your full ISA allowance – £20,000. Don’t forget that if you are married both spouses can use this allowance – so a total of £40,000. Children can get in on the act too – you can put £4,260 per child into Junior ISAs. (Note that 16 and 17 year-olds can have both a junior ISA and an adult cash ISA).
Make sure you have used the maximum pension savings allowed. Allowances that are unused can also be carried forward to the next year – you can take advantage of unused allowances from the three previous tax years. Pension contributions can also be used to help bring down income for higher earners – bring it down under £150,000 to avoid the additional rate tax band. If you bring your income under £100,000, you will also get your personal allowance back. Bring it under £50,000 and you will be eligible for Child Benefit.
3. Tax Exemptions
You have an annual Capital Gains Tax (CGT) exemption which allows for gains of £11,700 in the tax year. If your liabilities are bigger than that, you could consider using the gains over two tax years, as well as tax-free inter-spouse transfers. You can also use the Inheritance Tax (IHT) gifting exemption which means you can give away up to £3,000 of assets or cash each tax year without it being added to the value of your estate for inheritance tax purposes.
4. Business owners
Business owners can look at receiving dividend income rather than a salary – this will cut down National Insurance contributions (NICs). Remember also that the first £2,000 of dividend income is tax-free. You can also place pre-tax company profits into your personal pension – this will cut your company liability when it comes to NICs, Income Tax and Corporation Tax, however these contributions must be paid before the end of your financial year.
5. Make use of being married! Context?
A married couple can save up to £220 each tax year. If one of you earns less than £11,500 you can transfer £1,150 of their personal allowance to your spouse or civil partner if they are a basic-rate taxpayer. If one of you was born before 6 April 1935, the rules are different, and you may be eligible for the Married Couple’s Allowance.
If you would like to discuss end-of-year tax savings, or any other financial matters, we will be happy to help. Please contact us without obligation.
Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across the South of England including Oxfordshire, Buckinghamshire and Hampshire. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email firstname.lastname@example.org.