March 28, 2022

End of Year Tax Planning – Checklist

by Victoria Bulgin

in Financial Planning Insights

The 5^th 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.