The end of the tax year will be here before you know it. With 5 April just weeks away, now is the time to make sure you’ve taken advantage of any remaining reliefs, allowances, and exemptions that might be available to you – including ones you may not know about.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
Here are a few lesser-known tax and financial planning tips to get ready for the end of the tax year.
Check your PAYE code
Your tax code is based on the amount of tax you should be paying and what you can earn before tax applies, so it’s important you check that it’s correct.
Your tax code tells your employer how much tax needs to be deducted, but if you are self-employed, or have multiple employers or pension providers, you might have more than one code, and if you’re on the wrong one, you could either be paying too much or not enough tax.
Check your tax code and make any corrections to prevent any penalties you could face.
Individual Savings Accounts
Some advice you’ll always get near the end of the tax year – maximise your ISA allowance.
For the current 2021/22 tax year, your allowance is £20,000 and you can divide your contribution across a Cash ISA, a Stocks & Shares ISA, an Innovative Finance ISA, or any combination of the three.
Any capital gains and income made from your ISA won’t be taxed, unlike usual investments, so be sure to contribute as much as you can before the deadline.
Tax-free savings and dividend allowances
Take advantage of the 2021/22 savings income exemption of £1,000 for basic rate taxpayers, and the £500 exemption for higher rate taxpayers. For all taxpayers, the tax-free dividend allowance is £2,000. If you are a married couple or in a civil partnership, check if each of you has enough of the right type of income to use these allowances, and you could save on tax.
Don’t forget about capital losses
Did you know that if you realise capital gains and losses in the same tax year, you can offset the losses against the gains before the capital gains tax deduction is applied?
This year, the exemption amount is £12,300. If your gains will be covered by your exemption amount, then capital losses will be wasted. Consider different financial moves that will either help you push a loss to the following year or move up gains to the current one.
If you can establish a pattern of regular gift-giving that can easily be covered by your net income, these gifts will be free of Inheritance Tax, without worrying about reducing your capital assets or your normal standard of living. You don’t need to give to the same people each year, you just need to create a pattern of giving.
Seek out personal tax advice
Year-end tax planning is crucial. The earlier you get a start on planning, the more options you have at your disposal. Now is also an ideal opportunity to take a wider review of your circumstances and plan for the year ahead.
Dental & Medical Financial Services can provide a comprehensive review, tailored to your individual needs and circumstances to ensure you’ve done all you can for this tax year while also planning for the one ahead. Don’t delay, get in touch with us so you’re ready before April 5.
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