With the end of the tax year looming, if you haven’t already done so, now is an opportune time to ensure that you are making the most of your tax-saving allowances. To avoid missing out on any tax-saving opportunities you need to act before the 5th April.
In this article we take a look at some of the areas that you should consider before the end of the tax year, helping you to make the most out of your tax exemptions and allowances, particularly if you are higher or additional rate taxpayer.
Your ISA Allowance resets each new tax year. You can currently put up to £20,000 into ISA’s (cash and stocks & shares), so if you haven’t reached that amount and wish to make use of the tax-free saving, you should look to add to this before the end of the tax year. Don’t forget that if you have a spouse or partner, they too can save up to £20,000 in their own ISA, which will benefit your household (with a joint ISA allowance of £40,000). Junior ISA’s are also an easy way to save for your children. The maximum contribution to a Junior ISA account is £4,128 per child & is a great way to save for your child’s future.
Maximise your Pension Saving
If you're a UK taxpayer, you'll get tax relief on pension contributions of up to 100% of your earnings subject to a maximum annual allowance of £40,000. Although, it is possible to carry forward unused relief from the previous three tax years.
High Earners Reduce Taxable Income
If you are a high earner there are steps that you can take to bring down your taxable income by making charitable donations or pension contributions that can help in the following ways;
- Avoid losing Child Benefit (usually removed if one of the household earns more than £50,000)
- Reduce income to below additional rate tax band (that starts at £150,000)
- Regain Personal Allowance (gradually withdrawn on income over £100,000)
Consider diverting the pre-tax profits of your company into a personal pension. This will reduce your company’s liability to Corporation Tax, Income Tax and National Insurance Contributions.
Don’t leave it until the last minute to look at your tax planning. Act now to ensure you are making the most out of your ISAs and pensions.
If you would like to find out more information, please contact us on 01608 651608 or fill out our enquiry form and one of our experienced and knowledgeable advisors will assist you in your enquiry.