After the events of 2020, it would be very easy to forget about the tax year-end. However, much like a parking ticket, this isn’t something that is going to go away. You should face it now and get it out the way.
However, unlike a parking ticket, with adequate prior planning, we can actually work with you to make use of valuable allowances, while avoiding the rush before the tax year-end. We can also use this as an opportunity to ensure we are on track with your long-term plan, whether this is your retirement plan, building your investment portfolio or your legacy plan.
There are numerous ways we work with our clients to help them get ready for the tax year-end, however, here are some of our top tips:
- Many of our clients own a business (or multiple businesses). So, supposing you are a business owner or entrepreneur and depending on your level of earning, there is the option of taking some income from a dividend rather than a salary. This provides benefits such as reduced National Insurance Contributions, and the first £2,000 of the dividend is income is tax-exempt.
- We specialise in working with High-Net-Worth earners (HNW’s), and there are numerous ways we can help to reduce their estate tax bill. One of which is charitable giving, not only does it mean you’re doing a good deed for others, but it is also, (depending on your circumstances) an efficient method of reducing your tax bill. For example:
- The annual gift exemption allows you to gift £3,000 a year tax-free.
- If you are a higher rate taxpayer, you can reclaim the additional 20% tax relief.
- Conversely, the charity benefits as they claim the basic rate of tax on the value of your gift.
- Make sure you are using your ISA allowance of £20,000 and if you have, see if your spouse has maximised theirs as you can take advantage of the combined tax allowance of £40,0000.
The above is not an exhaustive list and are entirely dependent on personal circumstances, however, this should give you an idea of the possibilities that are open to you.
If you would like to discuss your situation further, please get in touch at [email protected] or +44 (0)1444 715200
This article is for general information and is not intended to address your particular requirements. No individual or company should act upon such information without receiving appropriate professional advice. 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. All figures relate to the 2020/2021 tax year.