Have you made the most of your personal allowances ahead of the April tax deadline?

Where does the time go? You think you have plenty of time to deal with your financial affairs and, before you know it, it’s the end of the tax year.

So, if you want to make the most of opportunities to reduce your tax bill, you need to act before the 5 April deadline.

You may wish to check the following:

  • If you leave at least 10 per cent of your net estate to charity a reduced rate of 36 per cent rather than 40 per cent applies. Gifts to a spouse can be made now to use up his or her nil-rate band and could help to reduce the value of your estate over the £325,000 band.
  • If your income exceeds your personal allowance, could you save tax by passing some on to your partner, if it were to fall within their personal allowance?
  • Could you top up your pension contributions? Tax relief is available and if you own a company you can claim a business tax reduction.
  • Tidying up your investments: Have you realised investments and bind gains or closed deposit accounts where funds may be attracting negligible rates of interest?
  • EIS investment: have you considered these investments, which offer income tax relief of 30 per cent, as well as possible Capital Gains Tax deferral?
  • Have you made use of your annual inheritance tax (IHT) exemptions? The general annual exemption is £3,000 (plus last year’s £3,000 exemption if you did not use it).
  • Have you paid the maximum of £20,000 into your ISA?
  • Junior ISAs or Child Trust Fund: Has £4,260 been invested for any child under the age of 18 in the last tax year?
  • Help to Buy ISAs: If you have adult children who are planning to buy a home, you might consider gifting funds so that they can invest in a Help to Buy ISA. This ISA is available to first time buyers over the age of 16. Savings of up to £1,200 in the first month and thereafter a maximum of £200 per month attract a 25 per cent tax-free bonus from the Government, providing £3,000 cashback on a maximum saving of £12,000.
  • Don’t forget about Lifetime ISAs if you are between the ages of 18 and 40. LISAs enable you to save up to £4,000 each year and receive a Government bonus of 25 per cent on any savings deposited before your fiftieth birthday.

These are just a few examples of the many savings that can be made by prudent tax planning. For more information on any end of year tax planning issues, and opportunities to reduce your tax bill, please contact us.

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