5 Tips to plan your year-end tax

The end of the financial tax year is fast approaching. How can you make sure you use the available tax exemptions and allowances before 5 April 2019? This week we’re taking a look at some allowances and services to help you make the most of your money before this year-end.

 

Income Tax

The tax free personal allowance for 2018/19 is £11,850 and the next £34,500 is taxed at 20%. 40% is charged on £46,350 and income above £150,000 has an additional rate of tax of 45%.

You may be able to reduce your tax liabilities if your income is close to the thresholds mentioned above and you are able to reduce your taxable income. This can be done by making pension contributions, tax incentivised investments, donations to charity or some way of changing your income into a non-taxable form.

You could also consider transferring income yielding assets to your spouse or partner to ensure that you both have income to use up relevant allowances.

 

Capital Gains Tax (CGT)

You have 4 years from the end of the tax year in which a loss is realised to make a claim on capital losses. Make sure to check whether any losses have occurred on assets or investments which are now worthless or any loans to a UK trading company which have become irrecoverable.

Things to consider:

• Entrepreneurs’ relief
• Investors’ relief
• CGT annual exemption
• Gift to spouse or civil partner prior to a disposal
• Main residence relief
• Non-resident CGT

 

Inheritance tax

The cap on the amount an individual can give per tax year is £3,000 without incurring any IHT implications. If the previous years’ is unused, then £6,000 can be given tax-free in 2018/19.

 

Stakeholder pensions

A UK resident under 75 can contribute up to £2,800 (net) to a stakeholder pension per year. 20% of tax relief will be reclaimed by the pension provider from HMRC and so the policy will be credited with a gross contribution of £3,600. However, you will not be able to access these funds until you reach pension age.

 

ISA’s

The annual limit for an ISA remains at £20,000 for 2018/19. This can be invested as UK stocks and shares, foreign shares, corporate bonds, cash and other permitted investments. The return on these ISA’s will be free from CGT and income tax.

 

There are many allowances and services available for you to make the most of your money and we can help to guide you in the right direction. If you would like to discuss how you could plan your year-end tax, then get in touch with us for more information.