5 activities to consider before the end of the financial tax year
Thursday, March 4 2021
We have summarised five activities to consider before the end of the financial tax year, 5 April 2016 to help you save tax and maximise tax free income.
1. Speak to you accountant
If you have an Accountant, speak to them now. You may need to make certain decisions before the end of the tax year. For example, if you trade as a limited company, you may need to decide whether you need to take a dividend before the end of the tax year.
2. Maximise your pension contributions
Pensions are one of the most tax efficient ways of investing your money. Because they are so tax efficent you are only allowed to contribute £40,000 in any one tax year. So as they say use it or lose it.
3. Make use of your Individual Savings Account (ISA) allowance
This year’s ISA allowance is £20,000 per person and it will remain at this level for the tax year 2021/22. Using this year’s and next year’s allowance you can put in a total of £40,000 in March and April or £80,000 as a couple. Between your pension and ISAs, over a period of time, you should be able to transfer your savings and investments into a tax free environment.
4. Inheritance Tax (IHT) gift allowances
Each individual has various IHT gift allowances every year. The main one is you are allowed to give away £3,000. If you haven’t used the previous tax year’s allowance of £3,000, you can also use this, making a total of £6,000 each, £12,000 for a couple. In April and the new tax year you will also have an additional £3,000 each and therefore over March and April a couple can give away £18,000 in total for IHT purposes. In addition to the £3,000 there are other allowances available.
5. Capital Gains Tax (CGT)
Everyone has an annual CGT allowance, which for this tax year is £12,300. Realising gains up to this amount is tax free. Through clever planning you could therefore achieve an additional tax free income of £12,300 this year. However, you may need advice on how to do this. Please feel free to call us 01726 891421.
If you would like advice with regards to any of the above please call Denis Mitchell on 01726 891421 or you can email him.
Find out more about Denis.