TT216: Pre-tax year end planning
It’s time once again to turn your thoughts to the end of the current tax year that is fast approaching on 5th April. As usual, now is the time to consider some tax planning matters such as:
- Are you drawing sufficient income from your business to cover your personal allowance for the current tax year of £10,000?
- Will you draw sufficient income to use up your basic rate band for Income tax at 20%? You can have income totalling £41,865 in the year to 5th April 2015 before you will pay any higher rate tax!
- Have you utilised your annual Capital Gains Tax exemption which amounts to £11,000? Any gains made up to this amount will be completely free of Capital Gains Tax, which is otherwise charged at 18% or 28 % depending on your total level of taxable income.
- Have you made use of your annual gifts exemption of £3,000 for inheritance tax purposes?
- Have you made the maximum advantage of your ISA entitlement? Under the old rules for ISA’s, you’d either get half your allowance in cash and half in shares, or you could choose to put it all in shares. However from 1 July 2014, the rules were relaxed. Although you still have a limit to the amount you can save, £15,000 in 2014/15, you now get to choose how you split this between stocks & shares and cash ISAs. In fact, you can use the whole amount for stocks & shares or the whole amount for cash.
- Have you made the maximum tax allowable pension contribution for this year? This could be £40k but perhaps even more if you have any unused relief available from earlier years!
The above list is not exhaustive, but is food for thought.
Please speak to your Barnes Roffe partner if you need help on any of the matters above.Talk to Barnes Roffe today