by Richard Buckley, Editor, Business Eye

By Luke Robinson, ASM Financial Planning The current tax year ends on the 5th April 2019 and it is therefore an opportune time to make sure that your finances are in order and that you are making the most of available tax reliefs and allowances. There is a lot to think about and as such some opportunities to explore are included below.



Pension contributions are a great place to start;
1. Pension saving – maximise tax relief
Higher and additional rate taxpayers may wish to contribute an amount to maximise tax relief at 40%, 45% or even 60% (by regaining personal allowance), whilst they have the opportunity.
Furthermore, consider topping up pensions for spouses. Contributions can be made up to your spouse’s earnings and not just £3,600 per annum.
The pension annual allowance is £40,000 but those with sufficient earnings can use carry forward to make contributions in excess of the current annual allowance.
If you are lucky enough to receive a bonus, consider exchanging this for an employer pension contribution. This course of action saves National Insurance which can be used to boost the contribution and hence your pension fund.
Business Owners should consider taking profits as pension contributions. This will result in tax savings for both the business and the business owner.
Pension contributions reduce taxable income. This can have a beneficial effect for high earners on both your personal allowance and child benefit.
An individual pension contribution that reduces your income below £100,000 will restore your full tax free personal allowance. The effective rate of tax relief on this contribution could be as much as 60%.
Child Benefit is reduced if the highest earning individual in the family has income of more than £50,000. It is extinguished completely once income exceeds £60,000. A pension contribution will reduce income and potentially reverse the tax charge, wiping it out altogether if income falls below £50,000.
However it is not just about pension planning;
2. Don’t lose your ISA allowance
ISA’s offer investors valuable protection from income tax and capital gains tax and are an administratively convenient wrapper.
The ISA allowance is lost if not used and with tax year end approaching, you don’t have long to top up.
The Lifetime ISA (LISA) is a new type of ISA introduced in April 2017, which is aimed at helping younger people buy their first home and/or save for retirement. The government will top up your payments with an additional 25% and the maximum contribution you can pay is £4,000 per tax year. Contributions count towards your overall ISA allowance and this is available if aged between 18 and 40.
An eye on Inheritance Tax;
3. Use annual gift allowances to reduce the value of your estate
You can gift £3,000 each year and this will immediately be outside your estate and not subject to Inheritance Tax
You can make as many gifts of up to £250 per person as you want during a tax year, as long as you haven’t used another exemption on the same person.
If a gift is regular, comes out of your income and does not affect your standard of living, any amount of money can be given away and ignored for Inheritance Tax.
It is also possible to make further tax free gifts. These are called Potentially Exempt Transfers and in this scenario you have to survive for seven years after making the gift to ensure that it is outside of your estate for Inheritance Tax Purposes.
Finally and for the riskier investors amongst you;
4. Enterprise Investment Schemes (EIS) offers 30% income tax relief on new equity investment in qualifying unquoted trading companies. In addition, it may be possible to defer Capital Gains Tax arising from the disposal of other assets.
5. Venture Capital Trusts (VCT) also offers 30% income tax relief by investing in shares of unquoted companies, subject to certain conditions.
ASM Financial Planning Limited is an Independent Financial Advisory Firm and we would be delighted to provide you with more information on any of the opportunities documented above.
Contact Luke Robinson:
Tel: 028 9099 6164
Email: luke.robinson@asmfinancialplanning.com

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