End of Tax Year planning Checklist

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The end of the Tax Year is just around the corner (5th April 2019) and it would be prudent to make use of certain allowances and reliefs by this date.

Here are 8 tips to maximise your tax efficient financial planning . . .

  1. Maximise pension tax relief

Individuals, up to age 75, can benefit from relief at their marginal rate of income tax on up to 100% of their gross earnings (capped at £40,000 gross per annum). If you do not work or earn less than £3,600 gross, you can still receive tax relief on contributions up to £3,600 gross (you contribute £2,880 and a further £720 tax relief is added to your pension by the Government).

  1. High earners making personal contributions to reclaim personal allowance

For every £2 of an individual’s income over £100,000, they lose £1 of their personal allowance; a pension contribution may help to reclaim any “lost” personal allowance, potentially resulting in effective tax relief of up to 60% on your contribution.

  1. Company contributions

Are you a company director? Do you have excess profits? Have you considered making a company pension contribution to your own pension plan? As long as the contribution can pass the 'wholly and exclusively' test, an employer contribution will benefit from corporate tax relief (saving 19% in 2018/19).

  1. Pension savings now before drawing benefits and trigger Money Purchase Annual Allowance (MPAA)

Are you considering retiring or drawing pension income in the near future? If you want to make any pension contributions greater than £4,000 gross, make those contributions before you draw any “taxable” income. Once an individual has drawn income from their pension, they will trigger the MPAA. From that point onwards, the maximum gross pension contribution per tax year reduces from £40,000 down to £4,000!

  1. Individual Savings Account (ISA) allowance

Individuals over 18 can contribute up to £20,000 into a Cash or Stocks & Shares ISA. 16 to 17 year olds may invest up to £20,000 in a Cash ISA only. Other ISAs are available including: Help to Buy, Lifetime, and Innovative Finance ISAs. Any contributions will count towards the overall ISA allowance of £20,000.

If a person is under 18, they may invest in a Cash or Stocks & Shares Junior ISA, which has an annual allowance £4,260 in Tax Year 2018/19.

  1. Capital Gains Tax Annual Exemption Allowance (CGT AEA)

You can realise up to £11,700 of Capital Gains during tax year 2018/19 without having to pay Capital Gains Tax (CGT). If you wish to repurchase the same investments you will have to wait 30 days otherwise this ‘Gain’ will not materialise.

If you are married or in a civil partnership and your partner has not used their CGT allowance, you can transfer assets to them free of tax which they can then sell to realise a gain within their allowance.

Any Gains made in excess of the AEA are taxed at 10% for Basic rate tax payers, and 20% for Higher and Additional tax payers (increasing to 18% and 28% for Gains from property).

  1. Marriage allowance

If you are a non-taxpayer and your spouse/civil partner is a Basic rate taxpayer, you can transfer up to 10% of any unused personal allowance (up to 10% of £1,190), saving your spouse/civil partner up to £238.

  1. Move assets to more tax efficient wrappers

If you have no spare cash to invest, do you have invested amounts in your taxable General Investment Account (GIA)? If so, you could transfer the appropriate amount into a more tax-efficient tax wrapper. How about transferring up to £20,000 into an ISA or the maximum tax-relievable amount into a pension (and receive tax relief)?

This list has not covered all allowances but if you require assistance with your Financial Planning, Ward Williams Financial Services Ltd can help.  For more information please do not hesitate to contact the team Ltd on 01932 830664 or by email on wwfs@wardwilliams.co.uk.

About the author

Guy joined WWFS in September 2011 as a Trainee Financial Adviser. After 4 years of experience and training, he qualified to become a Financial Adviser in November 2015. He enjoys meeting new clients to discuss their financial issues as well as building a close relationship. Before joining WWFS, he studied Business Economics at University and worked in the Public sector as an Economic Analyst.  Guy grew up in Suffolk and after university moved to Surrey. He has lived locally to Weybridge for the past 7 years. He loves to go cycling in the Surrey Hills in his spare time as well as enjoying countryside walks that finish at the pub! After getting married in 2016, Guy went travelling around Central & South America to see what the other side of the world can offer.