Tax planning tips

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Simpson Wood | 29th March 2022

Tax planning tips

Top 5 end of year tax planning tips


Have you made use of your available tax allowances for this tax year? Given the tax year end is fast approaching (April 5th) it is essential you are utilising your available tax allowances. Please read on for our top five end of year tax planning tips.

 

1) Contributions into pension

Have you any unused pension contributions allowances you need to use up?

If you earn over  £100.000, you could receive up to 60% income tax relief for contributing Within a pension.

If you are a high earner you may have a tapered annual allowance so utilising your pension allowance is essential. Don't lose it.

Remember, you can contribute up to £160,000 in any four year period into a pension.

 

2) ISAs

Put as much money as you can into your ISAs — the allowance is still £20,000. Remember, any growth within an ISA is tax free, and can be a great tax free income stream in retirement.

 

3) Capital Gains Tax utilisation

You have a capital gains tax exemption of £12,300, make sure you are utilising all of this, as once it lost it is lost!

Some people employ the strategy of annually selling existing investments assets that are subject to Capital Gains Tax (CGT) and use the proceeds to fund their annual ISA contributions. which are limited to £20,000 maximum per tax year. But Why Stop at just selling down £20,000? Depending upon your circumstances, it might make sense to sell more to fully utilise your capital gains tax allowance and help to fully or partially fund the following tax years ISA allowance.

 

4) Asset transfer to spouse

If your spouse pays less income tax than you. consider transferring your assets to them. Especially if you own a general investment account as they could pay less capital gains tax on disposal. If you own assets separately, consider owning jointly, as you will be able to make use of double your capital gains tax exemption.

 

5) Venture Capital Trust Investment (VCT)

There are a wide range of tax efficient investments available. however one of the most common vehicles to utilise is a VCT.

If you are a high earner and facing a large income tax bill. you could invest capital Within a VCT. Any funds invested within a qualifying VCT will receive 30% income tax relief. For example, a £50,000

investment into a qualifying VCT would reduce an income tax bill by £10,000, effectively costing you £40,000 for a £50,000 investment.

If you wish to discuss any of these further then please give us a call on 01484534431