With the end of the tax year approaching, there are a number of things you may want to think about ahead of the 5th April deadline.
Opening an ISA
Up to £15,000 per tax year is able to be stored in an ISA, and can be spread across stocks and shares ISAs and cash ISAs for those over the age of 18. This allowance is lost if it isn't used during the tax year, so if you do not use it, that’s it, it’s gone. ISAs are exempt from Capital gains tax and income tax.
Using Your Capital Gains Tax Allowance
In the current tax year, you can release capital gains of £11,000 without having to pay tax. If you have shares or funds outside of pensions or ISAs that have experienced gains, you may be liable for tax. It may be financially beneficial to sell these assets and place them in an ISA or pension, reducing any tax you may have to pay in the future.
Avoid Losing Your Child Benefit
Due to the “High Income Child Benefit Charge” brought into effect in 2013, couples may lose a percentage (if not all) of their Child Benefit Allowance. If you or your partner have an income of over £50,000 (including work benefits such as insurance or company cars), you will lose 1% of your child benefit for every £100 over the £50,000 threshold.
If you pay into a pension, you can counteract this. You can make an additional voluntary contribution to take your income below £50,000, thus avoiding any decrease in your benefits.
Reducing Your Inheritance Tax
If your estate is liable to be taxed upon your death, you may want to consider gifting sums of money to your relatives now, providing of course that you can afford to. You can gift as much as £3,000 in a tax year, as well as an additional £3,000 from the previous year. Per couple, this can be as much as £12,000 per year.
If you would like any help with your financial planning, please get in touch!