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Tax Planning

Things to do before the end of the tax year

Catherine Chapman :: Wednesday 21st March 2018 :: Latest Blog Posts


Tax Planning

As I sit here with the snow thawing and Spring just around the corner, I thought I would just remind you about any tax planning that you may wish to do before the end of the tax year – which is also just around the corner!

Dividend income

The dividend allowance allows everyone up to £5,000 of tax free dividends. If your spouse is not using their allowance, you could gift some of your shares to ensure they utilise their tax free dividend allowance. Transfer of assets between spouses should not result in a gain.

Child benefit

If you anticipate your income threshold will be over £50,000 in 2018/19 then you will need to stop the child benefit as the spouse who is the higher earner will be charged to income tax on the excess.

ISA

You can invest up to £20,000 in an ISA to 5 April 2018. The ISA limit for 2018/19 is £20,000. A junior ISA subscription limit is £4,128 for 2017/18 or £4,260 for 2018/19.

In addition to this there is a "help to buy" ISA, the monthly limit for which is £200 for 2017/18 and 2018/19; and a lifetime ISA for those aged 18 to 40, the monthly limit for which is £4,000.

Marriage allowance

If your spouse is not utilising their personal allowances and you are a basic rate tax payer, £1,150 personal allowance for 2017/18 can be transferred to you. This reduces your tax bill by up to £230 per year. However, from 2018/19 the allowance will be £1,185 which would save £237 per year.

Pension contributions

The standard annual allowance is £40,000 for pension contributions and is reduced by £1 for every £2 over £110,000. The lifetime allowance for 2017/18 will be £1,000,000 with an increase for 2018/19 of £1,030,000.

Capital gains tax

If you have two homes and reside in both, you may wish to consider making a main residence election for the second home if it is likely to be standing at a larger gain or you are likely to sell it first.

Do you have any capital losses being brought forward? If so, you may wish to utilise these in this year. Remember, however, that if you are going to use the losses brought forward these are fully offset before the annual capital gains tax exemption which is £11,500 for 2017/18 and £11,700 for 2018/19.

Inheritance tax

You may wish to consider making a net pension contribution of up to £2,880 (£3,600 gross) each year for members of your family. If you make contributions to your children's pension schemes on their behalf, they will receive the tax relief and the payments are treated as reducing their taxable income, so it could assist to keep them before the £50,000 income threshold at which they can retain the benefit.

You can give away up to £3,000 worth of gifts in a year. In addition to this you are able to gift up to £250 to as many individuals as you like and once your children marry a gift of £5,000 per parent is available.

If your annual income exceeds your normal expenditure you are able to gift this surplus. Records must be kept to demonstrate that your "normal" lifestyle has not altered by making this gift. Please note this needs to be regular and not a one off.

Lasting Power of Attorney

Have you made a Lasting Power of Attorney? This is a legal document which lets you appoint someone to look at your finances and make decisions on your behalf if you become unable to do so.

Will

Have you recently reviewed your Will and is it up to date? If not please contact your Solicitor.

Tax rate change

With the new tax year arriving on 6 April 2018 the majority of the tax rates change:

Personal allowances

£11,850

Tax rates

0 – 34,500 20%
34,501 – 150,000 40%
150,001 onwards 45%

Capital gains tax annual allowance

£11,700

National minimum wage

Aged 25 + £7.83 per hour
Ages 21 – 24 inclusive £7.38 per hour
Ages 18 – 20 inclusive £5.90 per hour
Under 18 £4.20 per hour
Apprentices under/over 19 £3.70 per hour

Auto enrolment pensions

Rates will increase for employees from 1% to 3% and employers 1% to 2%

Please contact Catherine at CBA Services Limited on 01258 840306 or 01725 552955, if you have any queries regarding the Budget or anything mentioned above or, if you need assistance with your bookkeeping, accountancy or tax issues.

Whilst care has been taken in preparing this publication it is for information only. It is not, and should not be construed, as advice and accordingly no reliance should be placed on the information contained herein.