New Tax Year Resolutions – Tax Tips

new-year-tax-resolutions

Many people wait until the end of the tax year to review potential tax planning. However, at MoynanSmith we firmly believe in being proactive. Now is the time for individuals to start planning for the current tax year, so here are a few tips:

  1. Utilise your ISA allowance - the ISA allowance for 2018/19 remains at £20,000. Why not start contributing to your ISA now? Also, consider using Junior ISA allowance (increased to £4,260), or if you're eligible contribute up to £4,000 to a Lifetime ISA. ISA allowances cannot be carried forward, so don't waste them.
  2. Maximise Pension Contributions – consider utilising your annual allowance of £40,000 (tapered down to £10,000 for someone earning over £150,000). Unused allowances can be brought forward from the previous three years, meaning any 2015/16 unused allowance would need to be utilised by 5 April 2019.With pensions being more flexible than previously, we have seen an increase of pensions as a tax planning mechanism.
  3. Utilise spouse / children's pension allowance – every individual can contribute up to £3,600 pa into a pension policy. Consider utilising other family member allowances.
  4. Utilise spouse CGT reliefs – if you are considering selling assets which have a gain, consider if it is possible to utilise your spouse's allowances (of £11,700) and basic rate bands. Being proactive can save thousands in tax.
  5. Make gifts – consider making gifts in order to utilise your IHT gift exemption of £3,000, which can be carried forward 1 year. Also, gifts out of income are not included as part of your estate for IHT purposes.
  6. File your Tax Return – sounds a strange point, but if you are due to a repayment, you will get your tax back earlier. Furthermore, if you have tax to pay, it will not result in the tax being paid earlier and can give you time to save for any surprise tax bills.
  7. Make a claim for early years tax repayments – any tax overpayments must now be claimed within 4 years, so any tax overpayment during the 2014/15 tax year must be claimed by 5 April 2019.
  8. Transfer income bearing assets to lower earning spouse – for example, if one spouse is a higher rate tax payer, and the other is a basic rate tax payer, consider transferring assets (e.g. shares, etc) into their name to mitigate higher rate tax.
  9. Claim allowance on commercial property – many allowable tax allowances go unclaimed on commercial properties (worth thousands of pounds in tax relief). Speak to a specialist tax adviser who can advise if any further claims are due.

Unfortunately, there is no "one size fits all" tax planning, and the above is just to give some food for thought. Any tax or investment planning should not be undertaken without speaking to a suitably qualified person.

If you wish to discuss your tax affairs, get in touch with one of our Chartered Tax Advisers, who will be happy to help.

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Sunday, 18 April 2021

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