As we near the end of this tax year it is your last chance to take advantage of your tax-free allowances and benefits.
There are many ways to ensure that you are proactively reducing the tax you pay and the tax relief you receive.
- Have you made use of your pension contributions? Not only can this provide tax relief on personal contributions, it can also reduce your gross wage to reduce your tax bracket. In the current tax year, you can contribute up to 100% of your salary or £40,000, (whichever is lower) but depending on your income level, this may be reduced. Up to 3 years’ unused pension contribution allowance can still be utilised.
- Withdrawals from your pension can be set up so that you are paying the minimum amount of income tax on this, if any at all.
- Saving Tax Efficiently. Have you utilised your ISA allowance? In the current tax year, you have a £20,000 entitlement that you can safe tax efficiently. There are many different versions of an ISA, so there will be one to suit your needs. If you already have an ISA but the fixed rate has ended, has reduced dramatically, or you are not getting the performance from your stocks & shares ISA, these can be transferred to another provider to potentially benefit from greater returns.
- As a parent or a grandparent, it is never too soon to start saving for your loved ones’ future. Again, there are many ways to do this tax efficiently.
- Capital Gains Tax – If you require a withdrawal from your investments and this is likely to result in a chargeable gain, with some careful tax planning the gains can be spread between this tax year and the next.
It is always important to speak with your adviser, if you wish to invest or withdraw money, to receive the best advice to make the most of your allowances.
As usual the UK tax year ends on the 5th April; however, with this date landing on a Monday, the last working day to process and post most applications will be 2nd April, with many providers declaring a cut off many days prior to this. Be aware that the last BACs payment cut off is usually a week prior to the end of the tax year. CHAPS may be a few days before the end.
This cut off does not only affect payments in. Providers also have a cut off date for Pension Commencement Lump Sums (PCLS) and income payments due to the tax systems used to report directly to HMRC. We have been advised by one of our main platform providers that they have imposed a cut off for PCLS plus Income payments of 17th March and 31st March for PCLS payments only. This is only if the funds are in cash. If it a sell down is required, the dates would be 1 week prior to the respective cut-off date.
If you are likely to make a contribution or require a pension withdrawal before the end of the tax year, and it is not already set up, please contact your adviser now to ensure that this can be facilitated in time.