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End of Year Tax planning

Posted by siteadmin on Friday 31st of March 2017.

ISA Contributions 
Firstly, the ‘big one’, the amount you can invest into an Individual Savings Account (ISA) resets at the tax year end and if you don’t use it, you lose it. This tax year, the ISA limit was increased to £15,240, which means that many of us may not have increased to the maximum allowance. So check how you have already invested and if possible top it up to the maximum tax free limit of £15,240.

Junior ISAs and Children’s Savings 
Junior ISAs for the 2016/17 tax year are £4,080; So again, check how much they have already invested and if possible top it up to the maximum tax free limit of £4,080. Capital Gains Tax allowance for children is set at the same rate as adults. Surprisingly, children can also make pension contributions and receive the usual tax relief.
 
Check your pension 
Your pension contributions need checking annually. The maximum pension contribution you can make for this year, whilst still receiving tax relief, is based on your earnings for the year and is capped at £40,000 (£10,000 if you have already started drawing a pension). Contributing to your pension is often a good way to manage your tax liabilities, although it should be done with your full financial plan in mind.  You will need to consider the pension lifetime allowance, which is currently £1 million. Anything above this level within your pension can currently be taxed at a very high rate. 

Capital Gains Tax Allowance 
Many forget the ‘gift’ from the taxman, the Capital Gains Tax Allowance is £11,100 for the current tax year. This means that you pay no tax on Capital Gains up to this threshold. It is also an individual allowance, meaning that a couple can shelter up to £22,200; genuine gifts from a spouse or civil partner do not count towards the allowance. There are various other exemptions and careful planning can again really help your tax position. 
 
Check your tax code 
Check your pay slip or ask tax office for a coding notice.You could also be paying too much if, for example, your employment changed and your correct tax code wasn’t applied or you have more than one job. You can claim back overpaid tax for up to four years. Use all of your personal allowances. Ensure that you are making the most of your individual tax-free personal allowance (PA), which is £11,000 for 2016/17 (£11,500 for 2017/18) for people aged under 65. You can transfer unused allowances to your spouse/partner if they have little or no income.

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