With the current tax year having begun on 6 April 2020, the clock is ticking and it is important to utilise all the tax reliefs and allowances available before 5 April 2021 in order to minimise your liabilities.
Reducing your tax bill is not something that you’re taught about, meaning that many of us end up paying more tax than we should be.
Personal tax planning is something that our expert team at Macalvins give great consideration to so that you can make the most of the reliefs and allowances available to you.
Individuals can contribute to their pension pots tax-free, providing they don’t go over the £40,000 annual limit., while unused allowances for the previous three years can also be utilised.
They can also contribute a further £2,880 towards a pension for a non-earning spouse or child, saving them even more in tax.
This not only helps future-proof you and your family’s retirement income but also helps keep you out of the higher or additional rate tax bands.
Have you opened an Individual Savings Account (ISA) for you and your family?
The allowance for 2020/21 is £20,000 per person, meaning you can start generating interest tax-free from today.
Individuals can gift up to £3,000 of gifts each year to family and friends without incurring Inheritance Tax. Remember, this allowance can be rolled over by up to one year.
Employee benefits – be wary
Cheaper options, such as electric vehicles, may also present a viable option, which could be advantageous.
All married couples in the UK are entitled to the Marriage Allowance, but very few are even aware it exists.
The allowance allows you to transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, providing they earn more than you and are within the basic rate tax band.
To benefit, the partner transferring their allowance must normally have an income below the Personal Allowance – currently £12,500.
This can result in annual tax savings of up to £250 a year.
We’re here to help
At Macalvins, we’re here to help. You can download our free tax planning checklist to ensure you are prepared for your year-end.
For help and advice, get in touch with our expert team at Macalvins today.