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TAX TIP TUESDAY: Just Two Months Remaining for Tax Planning this Year

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

The end of the tax year is quickly approaching.  If you aren’t working with a financial advisor currently, now’s the time. With 5th April just around the corner, you only have about two months to take care of the personal and business taxes you’re responsible for – but more importantly, take steps to minimise them.

Max your ISA

As the year winds down, so does the time to maximise your tax relief allowances. For the tax year, every individual gets a £20,000 contribution limit for their ISA accounts, and as you can’t roll over any unused portion, you either use it or lose it.

That means married couples can potentially save £40,000 annually – and with a child’s junior ISA, that total increases by another £4,128 per child (even more with 16 and 17-year-olds).

Also don’t forget Lifetime ISAs, which net you a 25% annual bonus from the government on every £1 invested up to £4,000 (giving you £1,000 from HMRC for free).

As all you need to do is save – and you don’t need to worry about Capital Gains Tax (CGT), declaring contributions on tax returns, or tax on UK income – ISAs are really the “low-hanging fruit” of year-end tax planning.

Pay attention to your pension

The standard annual allowance for pension contributions is £40,000 per person in the current tax year, but that limit will be reduced for higher earners, or if you have already taken pension benefits.

Unlike ISAs, you can actually roll over unused pension allowances from the previous three years as long as you’ve maxed out the current year’s allowance and were a member of a registered pension scheme.

For many self-employed doctors and dentists, this is a great way to navigate unpredictable income from year to year, allowing you to save as much as your public or privately employed peers over a three year period.

Think outside the box

While ISAs and pensions are the most popular avenues to limit tax liability, there are other ways to help lower a potential tax bill:

  • Landlords should claim all their property expenses
  • Don’t forget the £11,300 Capital Gains Tax allowance and tax efficient investments
  • Ensure you’re using the new ‘residence nil-rate band’ (RNRB)
  • Be charitable – your annual allowance for small gifts lets you give up to £3,000 a year, which is automatically exempt from IHT and if unused, it can be carried forward for one tax year
  • Partner with your lower-earning (or non-taxpaying) spouse to help lower your liability.

Partner with the professionals

In order to ensure you’ve left no stone unturned, be sure to work with financial professionals that specialise in tax, so you can effectively and efficiently complete your year-end tax planning. Contact our team today.

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