All of the focus over the next month will be about filing your 2017/18 tax return on time. However, what always gets missed is that there are only three months left of the 2018/19 tax year; which even though feels like a long time will go by in a blink of an eye so there is not a lot of time left for some income tax planning for 2018/19.
The 2017/18 tax year in effectively closed and there is very little that can be done now to reduce your tax liability, but there could be some income tax planning for 2018/19 that are still available to you.
Here are a few income tax planning for 2018/19 ideas that you may wish to explore a little further;
Make the most of your opportunity to save tax by investing in a personal pension
Subject to certain limits, pension contributions made personally are tax allowable – which means that the effective cost may be as little as 55p to invest £1 in a pension. If you don’t provide for your retirement, who else will?
Pension contributions – spouses and children
Consider contributing up to £2,880 towards a pension for your non-earning spouse or children. The government will then also contribute £720 to their pension too.
Contribute to your ISA. The allowance for 2018/19 is £20,000, whilst the Junior ISA allowance is now £4,260 for children under 18.
Transfer income producing assets
Consider transferring income producing assets between spouses/ civil partners. In order to use the Income Tax Personal Allowance and lower Income Tax bands of the transferee.
Use the Capital Gains Annual Exemption of £11,700 to realise gains tax-free. The allowance cannot be transferred between spouses or carried forward.
Make use of the IHT Annual Exemption to make gifts of £3,000. If unused, the exemption can be carried forward one year.
Consider making any EIS or VCT investments early in the 2018/19 tax year, so that if any tax repayment is due, it may be made sooner, or enable relief to be carried back to the previous year.
Gifts to charity
Charitable donations made under the Gift Aid scheme can result in significant benefits for both the donor (if a higher rate tax payer) and the charity.
A cash gift of £80 will generate a tax refund of £20 for the charity so that it ends up with £100.
The donor will get higher rate tax relief of £20 so that the net cost of the gift is only £60. Where the 45% additional rate of tax applies, the net cost of the gift in this example would be only £55.
At Blue Rocket we are always working to mitigate your tax liabilities as best we can. The above are our top 8 and we would be happy to discuss any of them with you; just get in touch.
If these 8 are not enough, here is a link to our previous tax planning blog;
We don’t disclaim any of the ideas above, in fact we are really quite proud of them. However, before you take any action you really should take professional advice on your personal circumstances.
If you have some FAQ’s or looking for some top tips in other areas, please take a look at our articles page here.