We’re only a few days away from the end of the tax year on April 5 and, with an early Easter bringing two Bank Holidays, you’ll need to act quickly to make the most of some of the tax allowances before the new financial year arrives.
The current Individual Savings Account – or ISA – allowance is £20,000 for 2017/18, which can be spread across a cash ISA, an investment ISA, an innovative finance ISA, or any combination of the three. Any remaining allowance not used by April 5 cannot be carried over – so it’s a case of either use it or lose it.
The ISA allowance for 2018/19 will remain at £20,000.
The current annual pension contributions limit remains at £40,000. In addition, unused relief from the previous three tax years may be used once you have paid in the maximum £40,000 limit for this financial year.
Pension savings qualify for higher rate tax relief and may help to reduce your payments on account, so if you are able to make more payments into your pension, now would be the time.
The Capital Gains Tax annual exemption for 2017/18 is £11,300. This is a use it or lose it allowance, which cannot be carried forward, so it makes sense to maximise this if possible before the end of the financial year.
If you separated permanently from your spouse during this tax year, and assets need to be transferred between you, it might pay to do so before April 5. This is because assets passing between spouses are exempt from Capital Gains Tax during the financial year that the permanent separation took place.
End of year tax planning is an important part of managing your tax affairs and minimising your tax liability. If you’d like any help with accounting or taxation issues, please get in touch with the team at Optimum Professional Services.