As it nears to the end of tax year I have given some thought to some of the ways that action taken now may assist in reducing a tax liability for the year ended 5 April 2018.
Consideration should be given to ensuring that all the appropriate reliefs have been used. In addition investing in tax efficient products or simply considering the timing of income and expenses, to name a few, can also be ways to minimise tax liabilities.
A few examples of where planning can make all the difference are given below:-
- Reducing taxable income by making gift aid donations or changing the nature of investments i.e. invest in ISA’s or investment bonds to preserve personal allowances or child benefit.
- Make sure that, where possible, the savings allowance and dividend allowance which used. The savings allowance allows interest of £1,000 for a basic rate payer and £500 for a higher rate tax to be paid tax free. In addition dividends up to £5,000 will be liable to tax at 0%.Please note that the dividend allowance reduces to £2,000 with effect from 6 April 2018, therefore bringing forward the payment of dividends where possible may be beneficial.
- Review pension contributions to see whether there are any unused allowances from previous years which could be used to make a higher contribution before 5 April 2018 to help reduce taxable income.
- Married couples or civil partners should review whether the conditions are met to be able to transfer some of the personal allowance to a spouse or civil partner.
Our useful generic Year-End Tax Planning Guide can be found here.
If you would like to discuss this or any other tax planning further please do not hesitate to contact us.