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March 28, 2022

End of Year Tax Planning – Checklist


in Financial Planning Insights

The 5th April is fast approaching. Whilst the rising costs of living might be making you feel like every penny you earn is disappearing into the ether – capitalising on tax allowances will soften the blow (a bit).

Just to recap on the available allowances:

ISAs – £20k. Plus £9k per child in a Junior ISA (JISA)

Pensions – £40k – income tax relief at your marginal rate of tax. Remember though if you earn over £200k you will need to check what your annual allowance is. Exceeding this will mean you’ll face an annual allowance tax charge.

VCTs – £200k – income tax relief 30% / tax free dividends / no CGT on gain

EIS – £1m (£2m in knowledge-intensive companies) – income tax relief 30% / CGT exempt if shares held for 3 years / CGT deferral / loss relief / business relief for IHT after 2 years

SEIS – £100k in qualifying startups – income tax relief 50% / CGT exempt if shares held for 3 years

Capital Gains – If you’ve made any capital gains, make sure you utilise your CGT allowance of £12,300. Don’t forget you can crystallise a loss to reduce CGT.

Inheritance Tax (IHT) – Each year you have an annual gift allowance of £3k (or £6k if you’ve not used last years). Plus your small gifts allowance of £250 per person. You can also make gifts from surplus income (this particular area can be complex so please seek advice before utilising this exemption).

Personal Savings Allowance – £1k or £500 depending on your rate of tax (£0 for additional rate)

Dividend – £2k

This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a personal recommendation.

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