You could reap long term rewards by utilising this years tax entitlements. Remember to use them before it’s too late after April 5th.
Here are 7 things to think about before tax year end:
1. Income Tax
Your personal tax free allowance is £12,570 from income such as your salary or property income where you don’t have to pay income tax.
- Check your tax code is right to make sure you’re not over paying tax. Your tax code is on your payslip.
- If you own a business, check your salary and dividends balance to optimise your personal allowance and lower dividend tax rates.
- If you’re married or in a partnership you could save money by utilising your finances as a couple. If one of you pays no tax, you can transfer to the other person £1,260 of your allowance.
2. ISA Allowance
You can save £20,000 into an ISA each year without paying income tax or capital gains. This doesn’t carry over so it’s important to use it.
The limits for different ISA types for the 2021/22 tax year are:
Cash, Stocks and Shares – £20,000
Junior or Children’s ISA – £9,000 a year
Help to Buy ISA – £200 a month
Lifetime ISA – £4,000 a year
3. Pension Top Up
One of the best ways to save for retirement especially as you get income tax relief on the money you put in is your pension pot. For most this is £40,000 in a tax year, or 100% of your salary. If you’re earning over £200,000 a year, your annual allowance will gradually reduce to £4,000 in the tax year, this is called tapered annual allowance.
4. Correctly Gifting
Cash gifts to your loved ones can form part of your estate for inheritance tax purposes:
- You can give away £3,000 each tax year free of IHT
- A couple make a £6,000 combined allowance for the year
- You can carry unused allowance over for 1 year
5. Capital Gains Tax
Capital Gains Tax is tax on the profit when you sell an asset that’s gone up in value. Things like:
- Possessions worth £6,000+, except your car
- Property that isn’t you main residence
- Shares that don’t form part of an ISA
- Assets of a business
6. Child Benefit Regain
The tax-free childcare scheme enables you to benefit from £500 every 3 months per child for childcare costs. The government contributes £2 of every £8 you pay.
Qualification depends on::
- Your work
- Your income
- The age of your child
- Iimmigration status
Check Tax-Free Childcare.
7. Financial Review
Now is a good time to take a look at your finances to make sure you’re maximising your entitlements and exemptions.
To ensure you are benefiting from the reliefs available to you, talk to one of our FCA authorised wealth managers by arranging a Discovery Call [Here]
This article is for informational purpose only. It does not constitute finacial, tax or legal advice, nor is it a recommendation to buy, sell or hold any investment. Past performance is not a guide to the future, investments rise and fall so investors could make a loss. No view is given on the present, future value or price of any investment and investors should form their own view on any proposed investment.