Here are ten ideas to consider to help ensure you make the most of your tax allowances and exemptions before it’s too late.
- Make use of your ISA allowance of £20,000.
- Check your spouse or partner has maximised their ISA allowance to fully utilise the combined allowance of £40,000.
- Make contributions of up to £4,260 per child into Junior ISAs to help them get a head start.
- Those wishing to maximise pension saving should consider fully utilising their annual allowance. Unused allowances can be carried forward, but only from the three previous tax years. If your 2018/19 allowance is fully utilised, you should review whether you have any unused allowances from the 2015/16 tax year first.
- High earners could take steps to bring their taxable income down by making pension contributions or charitable donations. These can help individuals: a. Bring their income to below the additional rate tax band, which starts at £150,000.
- Take advantage of your annual Capital Gains Tax (CGT) exemption by realising gains of £11,700 in this tax year. Those with larger liabilities might look to take gains over two tax years and make use of tax-free inter-spouse transfers.
- Use your Inheritance Tax (IHT) gifting exemption of £3,000 for this year.
- If you’re thinking of making a large pension withdrawal, it could make sense to spread the withdrawal over two or more tax years to minimise your Income Tax liability.
- If you own a business and depending on your earnings, consider taking dividend income instead of salary to avoid National Insurance contributions (NICs). The first £2,000 of dividend income is tax-free.
- Divert your company’s pre-tax profits into a personal pension to reduce your company’s liability to Corporation Tax, Income Tax (including on dividends) and NICs. Contributions will need to be paid before your company’s financial year end in order for the business to qualify for the deduction in that accounting period. In many cases, that deadline will be 31 March 2019.
b. Regain their Personal Allowance, which starts to be withdrawn for incomes over £100,000.
c. Avoid losing Child Benefit, which is gradually removed if one parent in the household earns more than £50,000.
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The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.