Donald Reid Group

Are you prepared for the end of the 2018/19 tax year?

The 2018/19 tax year-end is rapidly approaching. Have you made the most of the allowances and reliefs available to you ahead of the 5th April 2019 deadline?

Here are some of most common tax planning points that you might like to consider but please do get in touch with the DRG tax team to discuss your personal circumstances.

Income Tax

Personal, savings and dividend allowance

  • The personal allowance of £11,850 increased in 2018/19. Have you fully utilised this tax-free income or considered using marriage allowance to pass 10% onto your spouse?
  • The savings allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers so make sure you receive your savings income e.g. loan interest by 5th April 2019.
  • The reduced dividend allowance of £2,000 is not to be forgotten. This first £2,000 of your dividends are tax free irrespective of your level of income.

Pension contributions

If you are considering making pension contributions over the coming months, the pension annual allowance for 2018/19 is £40,000. However, this is tapered down to a minimum of £10,000 for those individuals with an income in excess of £150,000. You may have unused pension allowances from the preceding three tax years of which you could also take advantage. Get in touch if you are unclear of your available pension allowance.

ISA allowance

ISAs are the most common form of tax-free investments. Make sure, where possible, to use your full annual allowance of £20,000 by 5th April 2019 as any interest on investment income received will be tax free.

Gift aid donations

If you are considering make a sizeable gift aid donation in the coming few months, do so by 5th April 2019. You will benefit from an uplifted basic rate band, resulting in a lower tax liability.

EIS/ SEIS investments

If you are due to make any EIS/ SEIS investments, you should aim to have the shares issued by 5 April 2019. You can make a carry back claim to the previous year, meaning that we can assess the most tax efficient year for your tax relief to be claimed. There is still time for your 2018/19 investments to be included in your 2017/18 tax returns prior to the filing deadline of 31 January 2019.

Capital Gains Tax

Annual exemption

Each year individuals benefit from an annual exemption, meaning that in 2018/19 you can make capital gains of £11,700 with no tax liability. If you are looking to make several disposals over a short space of time, which will realise capital gains, consider making the first prior to 6 April 2019 to benefit from two years of annual exemptions.

Realising capital losses

If you are going to make any capital losses on the disposal of your assets, do so prior to 6 April 2019 if you have made no other disposals in the year to allow you to crystallise the loss. Where you make a gain and loss in the same year, they are offset, often wasting your annual exemption.

Inheritance Tax

Annual Exemption

You receive an IHT annual exemption of £3,000 so if you have not done so already, you may wish to make a transfer of £3,000 to family or friends. This is a tax-free lifetime transfer which is not bound by the seven year rule surrounding potentially exempt transfers: this is a sum that is deduction from your estate immediately.

If you have not already utilised your allowance for 2016/17, you can carry this forward for one year, allowing you to make total gifts of £6,000 prior to 6 April 2019.

If you would like to discuss how the above reliefs and allowances could affect you personally, please do not hesitate to get in touch with the tax team at DRG Chartered Accountants.

 

 

DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.


 

 

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