The end of the tax year is quickly approaching and there are a number of ways you can make maximum use of valuable tax reliefs before the year end on 5 April. Here are a few things to consider:
Your ISA allowance
The maximum amount that can be invested in an ISA during 2017/18 is £20,000, which can be split as desired between a cash ISA and stocks and shares ISA. If this allowance is not fully utilised, it cannot be carried forward. All income and gains within an ISA are completely tax free.
Remember the Marriage Tax Allowance
If your spouse is earning less than the personal allowance of £11,500, in certain circumstances you can reduce your tax liability by transferring 10% of this allowance to set against your own income. During the current year it can reduce tax bills by up to £230.
Review your pension
Any individual, including children, can contribute £2,880 net (£3,600 gross) into a personal pension. Subject to earnings, you may be able to contribute up to £40,000 into your pension this year, however, this allowance is also carried forwards by up to three years. It is worth reviewing your past contributions to ensure that where possible, any unused allowances for previous years have been utilised.
Understand Capital Gains Tax “CGT”
The Capital Gains Tax annual exemption for 2017/18 is £11,300; if it is not utilised it is lost and cannot be carried forward.
Consider Inheritance Tax “IHT”
Gifts totaling £3,000 per annum are exempt from IHT. Although this can be carried forwards for one year if not used, the allowance for 2016/17 will be lost if not used before 6 April 2018.
There are many sensible steps that you can take ahead of the new tax year to make use of valuable tax reliefs and allowances. Download our pre year-end tax planning guide, or contact the tax team at Wilkins Kennedy for more information.