As a higher rate taxpayer, I realise that the end of the tax year is almost on us and I have not taken any action to keep my tax bill to a minimum this year. What should I be looking at doing before 5th April?
All tax planning needs to be tailored to your own requirements but we can give you some useful pointers that you should still have time to act on.
Firstly, annual planning should be undertaken to look at where you may be close to, or above, thresholds that take you into higher rates of tax – both income and capital.
Property income and savings income below £1,000, and dividend income below £2,000, are not taxed at all. Neither is total personal income up to £11,850.
You can reduce your taxable income by making pension contributions, investing in certain ‘high risk’ investments such as Venture Capital Trusts, Enterprise Investment Schemes (EIS) and Seed EISs, or Social Investments eligible for relief.
There’s also the option to reduce your higher rate tax bill by making gifts to charities under the Gift Aid scheme.
You are also eligible to make annual capital gains of up to £11,700 tax free and, if you have exceeded this, look at realising investments that have made losses to offset against it.
Secondly, consider all your annual reliefs – Individual Savings Accounts (ISAs), inheritance tax allowances and pensions, and use what you can.
Finally, consider what has, and is, changing: pension allowances have reduced and buy-to-let landlord’s tax reliefs have been squeezed.
Many of the figures involved need calculating and are too detailed for a short answer. You will almost certainly benefit from a quick chat with your advisors to fine tune your planning.
Get in touch with one of our Birmingham Tax Advisors for a personal tax review.