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TAX TIP TUESDAY: Tax Breaks – use them don’t lose them. Act before 5 April to not lose out.

Our five minute read, Tax Tips for UK doctors and dentists will help you save tax, get you organised with your tax affairs and make you feel at ease that everything is taken care of.

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. 

There are a number of annual tax breaks available for you to take advantage of and save money before the end of tax year. The key is that they expire (and renew!) annually and many have eligibility requirements, so today we’ll highlight the important tax breaks you can utilise.

Savings and retirement

First and foremost, you should take full advantage of your ISA allowance, which is £20,000 for the 2017/18 tax year. This year, you will also be able to transfer funds from a help to buy ISA, (as long as the money was in the account before 5 April 2017) to a lifetime ISA. This contribution doesn’t count towards the yearly lifetime ISA limit, which allows you to possibly save an additional 25%, tax free.

Pension accounts allow individuals to save £3,600 or 100% of their income, whichever is higher, each year. They are, however, subject to a variety of limitations. Among those restrictions are the £40,000 annual allowance limit (which is reduced to £10,000 for individuals earning over £150,000) as well as the lifetime allowance of £1 million.

Investment tax breaks

Venture capital investments also hold assorted reliefs to foster investment interest. There’s a lot involved so you can learn more about income tax relief, investment limits, and additional information about capital gains tax relief on the HMRC website.

Certain employee share schemes are tax-advantaged as well. You can choose from company share option plans (CSOPs), enterprise management incentives (EMI), share incentive plans (SIPs), or save as you earn (SAYE) schemes. Visit the government’s website for more about these schemes.

Working with a financial advisor will guarantee you’re saving the most money and investing in the right areas.

Marriage and civil partnerships

It’s wise to check your eligibility for the marriage allowance, especially since you are allowed to backdate your claim to include any tax year since 5 April 2015, if you were eligible.

This allows an individual to transfer £1,150 of their personal allowance to their spouse or civil partner if they don’t earn anything, or if their income is £11,500 or less and your partner’s income is between £11,501 and £45,000 (£43,000 if you’re in Scotland).

Property breaks

This particular tax break has quite a few caveats, but essentially if your property or trading income is less than £1,000, trading and property allowances automatically apply. Keep in mind that the allowance is measured against gross income (not earnings after the allowance is subtracted) so if your gross income is more than £1,000, the allowance is not automatic.

If your gross income surpasses £1,000, it might be advantageous to deduct the £1,000 allowance rather than actual expenditure. In the event of a loss, claiming loss relief might be the better route for your bottom line. For this particular allowance, you must make your decision on or before the one year after the self-assessment filing deadline date for the tax year.

Disposing of assets

The capital gains tax annual exemption for this tax year is £11,300 if you wish to dispose of chargeable assets. It’s important to dispose of your assets at the right time to optimise your savings – this may mean managing the sale or other arrangements in separate tax years. A financial advisor would be most qualified to advise you on the best course of action.

Gift giving

Another area of tax savings is small gift giving. Per year, you can gift up to £3,000, and you’re allowed to roll over any unused exemption for one year. Additionally, you can gift an individual up to £250 under the small gifts exemption.

As you can see, there are quite a few tax breaks that allow you to save money before the tax year runs out. But with so many different options, many with qualifications to meet and deadlines to be aware of, the best way to save the most money is to work with a financial specialist.

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