What Tax Allowances And Reliefs Are Available?
The tax year is about to end ...
POSTED BY HELEN BEAUMONT ON 09/03/2018 @ 8:00AM
Spring is finally here (we hope) and the tax year is about to finish too. I thought a brief reminder of your tax allowances and reliefs would be useful if you are considering using them ...
If you're wondering what tax allowances and reliefs are available, my list can help!
copyright: stokkete / 123rf stock photo
I've split this list into Income Tax, Capital Gains Tax and Inheritance Tax and have summarised the allowances and reliefs in each. Remember, there may be others that you're entitled to that I haven't discussed here:
Married couples and civil partners can review their level of taxable income in this tax year to structure their affairs ensuring both spouses use their personal allowances and basic rate tax bands.
You should consider Inter-spouse transfers of your income producing assets, and remember, any transfer is exempt from capital gains tax too.
Mitigating the 60% tax rate
If your taxable income is between £100,000 and £123,000, you will pay an Income Tax rate of 60%. To avoid this, make a pension or gift aid contribution before the end of the month.
This allowance is for anyone that has dividend income. Dividends below £5,000 are free of Income Tax. Remember, from April 2018 (the new tax year) the dividend allowance has been reduced to £2,000.
Have you used your full allowance for the financial year? Don't forget, you can contribute up to £2,880 per year into your children's (or grandchildren's) pension. The funds are tax protected but can't be drawn on until the child/grandchild is at least 55.
Individual Savings Allowance (ISA)
You can invest up to £20,000 and the income and capital growth of the ISA is tax-free. You can't carry back ISA contributions, but there is still time to get an ISA subscription sorted for the year 2017/18.
Capital Gains Tax
As we're so close to the end of the tax year, it would be prudent to delay exchange of contracts on disposal of chargeable assets until the new tax year. The delay will naturally help your cash flow.
If you want to dispose of more than one asset, it may be worth splitting the disposals either side of 6 April, to benefit from two annual allowances rather than just the one.
If you haven't already made use of your 2017/18 Capital Gains annual exemption, consider making sales to utilise these. It's £11,300 for an individual and £5,650 for a trustee.
Remember, each spouse or civil partner has their own Capital Gains Tax annual exemption and assets can be transferred between the two at a value that is neither a gain or a loss.
Do you have any assets that have become of negligible value in this financial year? If so, a capital loss could be deducted against your taxable income in the right circumstances. It's certainly worth checking!
Residence Nil Rate Band (RNRB)
The 6th April 2018 will see the additional Inheritance Tax free band per married couple rise to £250,000 where applicable, the result being a couple’s first £900,000 suffering no Inheritance Tax.
Taxation of pension funds on death has changed. It is vitally important for pension holders to review what happens on their death and revisit the position.
I hope that I've given you some food for thought and remember, there's still time to consult an expert tax advisor such as myself to ensure your making use of these allowances and reliefs.
"Would you like to know more?"
If you'd like to talk about anything I've discussed here (and other tax allowances and reliefs that are available) then do call me on 01908 774323 or click here to ping me an email and let's see how I can help you.
Until next time ...
More about Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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