Four tips to prepare you for the end of the tax year
We’re nearing the end of the tax year in April, so it might be time to start thinking about what you can do to minimise the tax you’re paying.
Here are our four things you can do to be better off:
- Make use of your pension allowance
Contributing additional funds into your pension can help to increase the level of tax relief you receive.
It’s important to note that the annual pension cap is £40,000 – but it is possible to contribute more than this if you have any allowance left over from the past three years. The pension cap for 2015 to 2016 was £80,000 so this year is your last chance to take advantage of that.
Pension contribution effectively reduces your income, so if you’re able to dip below a threshold – for example the £50,000 income threshold for child benefits – you will be able to keep the benefits while also saving for your future.
You can even ask your employer to make a contribution into your pension in place of a bonus.
- Make use of ISA allowance
If you’re looking for relief from income tax or capital gains tax, you are able to put a lump sum of up to £20,000 into an ISA this tax year. You can split your allowance across a Stocks & Shares ISA and Cash ISA or invest it all in either one.
ISA allowances do not carry over, so it’s a good idea to make use of as much of the allowance as you can before the end of the current tax year.
- Make use of capital gains tax allowance
For those with an investment portfolio, it is possible to withdraw up to £12,000 in capital gains tax and re-invest the money somewhere else, whether it be into another fund entirely or into your own pension.
If there is tax to pay on gains at a 20 per cent rate, contributing it to your pension will reduce this to 10 per cent.
- Make use of the expert tax team at Howard Worth.
For help and advice on preparing for the end of the tax year, contact our expert team today.