Year-End Tax Planning – why it’s vital to be prepared

The clock is ticking towards the end of the tax year on 5 April 2021 and it is important that you utilise all of the available tax reliefs and allowances before the new tax year in order to minimise your liabilities.

Reducing your tax bill is not something that you’re taught about, meaning that many of us end up paying more tax than we should be.

Personal tax planning is something that our expert team at Milsted Langdon give great consideration to so that you can make the most of the reliefs and allowances available to you.

Pensions

Individuals can contribute to their pension pots tax-free, providing they don’t go over the £40,000 annual limit.

They can also contribute a further £2,880 towards a pension for a non-earning spouse or child, saving them even more in tax.

This not only helps future-proof you and your family’s retirement income but also helps keep you out of the higher or additional rate tax bands.

ISA

Have you opened an Individual Savings Account (ISA) for you and your family?

The allowance for 2020/21 is £20,000 per person, meaning you can start generating interest tax-free from today.

Inheritance Tax

Individuals can gift up to £3,000 of gifts each year to family and friends without incurring Inheritance Tax. Remember, this allowance can be rolled over by up to one year.

Employee benefits – be wary

Most employee benefits – such as company cars – are now taxable as regular income. If you don’t actually need a company car, substituting it for cash and contributing it towards your pension, for example, may be a more tax-efficient option.

Marriage allowance

All married couples in the UK are entitled to the Marriage Allowance, but very few are even aware it exists.

The allowance allows you to transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, providing they earn more than you and are within the basic rate tax band.

To benefit, the partner transferring their allowance must normally have an income below the Personal Allowance – currently £12,500.

This can result in annual tax savings of up to £250 a year.

We’re here to help

At Milsted Langdon, we’re here to help.

For help and advice, get in touch with our expert team at Milsted Langdon today.

Posted in Blog, HMRC, Tax.