Back

The Secret to Getting Ahead is Getting Started

November 2021

by James Hogg

The UK tax year ends on 5 April 2022 but early planning can help you avoid a last-minute rush or potentially missed opportunities. 

Below are some reminders that could help you make the most of your money and ensure that you don’t miss the chance to make the most of valuable tax efficiencies and allowances in your tax planning:

FOR INDIVIDUALS

Income Tax & Personal Allowance

The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. It’s smaller if your income is over £100,000. 

Your Personal Allowance may increase if you are eligible to claim Marriage Allowance or Blind Person’s Allowance.

Capital Gains Tax (CGT)

Have you considered using the £12,300 annual exemption? With careful and early tax planning, it could be possible to reduce, eliminate or delay the payment of your CGT liability.

Dividends

Have you utilised the Dividend allowance of £2,000?

Pension

Have you utilised your tax-efficient contributions of up to £40,000 for this tax year or any unused allowances from the three previous tax years?

Individual Savings Account (ISA)

Have you utilised your £20,000 tax-free ISA allowance?

Junior Individual Savings Account (JISA)

Have you considered saving up to £9,000 for your child/children in a JISA?

Lifetime Individual Savings Account (LISA)

Could you take advantage of this tax-efficient saving option if you are between 18 and 40 (up to £4,000 of your £20,000 ISA allowance)?

Gifts

Have you used your maximum gift allowances and considered any gifts you can make out of income?

Trusts

Have you considered setting up a Trust to protect and maximise your family’s future assets?

Pension Drawdown

If you are 55 or over, you may be able to start drawing down pension benefits from a personal pension such as a Self-Invested Personal Pension (SIPP), even if you are still working. You may take up to 25% tax-free with the rest taxed at your marginal rate.

Carry forward benefits

Have you claimed your higher or additional tax relief? Have you used the carry forward rules in order to benefit from any unused allowance from the previous three tax years?

FOR BUSINESSES

Make tax-free pension contributions

Have you considered Salary Sacrifice pension contributions? Where employees exchange some of their salaries in return for pension contributions made by the employer both parties can save on National Insurance contributions.

Research & Development (R&D) tax credits

Have you considered looking into R&D tax relief for SMEs?

Corporate Protection

When paid through the business, protection such as Relevant Life cover can help reduce corporation tax and avoid paying premiums from taxed income.

Review Employee Benefits

Attracting and retaining key employees is a top priority at the moment – are your benefits fit for purpose and the best value?

Personal circumstances differ and not all of the above is applicable/relevant to every client. For more information or to discuss any of the points raised above, please contact your adviser, or call us directly on 0161 819 1131. Up to date information can also be found at gov.uk.

 


Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.
The Financial Conduct Authority does not regulate Tax Advice, Estate Planning or Will Writing.
The content in this article is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.
Pareto Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.
Back