YEAR END CHECKLIST- THE DO’S AND DON’T’S
As the financial year nears its end and change seems to be the theme for the forthcoming year, be it the UK leaving the EU or the prospect of a new US president, one thing is certain, we will all still have to pay our taxes. What we can do though is ensure that we lessen the impact of tax and ensure that you benefit, where possible, on tax reliefs.
There are many different areas to consider and here are a few key questions to ask to begin with;
- Have you and/ or your employer utilised your pensions annual allowance. Unused allowances can be carried forward, but only from the three previous tax years. If your 2019/20 allowance is fully utilised, you need to review whether you have any unused allowances from the 2016/17 tax year first. Higher earners annual allowances are tapered, please speak to us and we can assist on this matter.
- Have you invested the maximum ISA allowance of £20,000 in the 2019/20 tax year? The combined ISA allowance between you and your spouse/civil partner is £40,000.
- Have you utilised your capital gains annual exempt amount, the exempt amount for the 2019/20 tax year is £12,000? If this has been unused, this could give rise to opportunities to make tax free capital gains in the 2019/20 tax year.
- If you pay or receive dividends, the first £2,000 of dividend income in the 2019/20 tax year is tax-free. Please consider taking dividend income rather than salary to utilise this allowance.
- Are you planning on making a large pension withdrawal in the 2019/20 tax year? If so, it would be advisable to spread this withdrawal over two or more tax years to minimize your income tax liability.
- Did you know that each individual has an annual Inheritance Tax gifting exemption of £3,000?
These are the first key questions to ask but there are also many additional points that can be considered and to help you understand your position, we have prepared a detailed questionnaire that will help answer these questions. If you would like to look at the questionnaire click here, or talk to us about possible ways to get additional relief, contact us.