Tax Year End Planning

February 2017
Share this article:

As the year tax end is fast approaching, here are 10 things that you may need to act upon before 5 April 2017.

  1. If, as a married couple or civil partners, one of you receives less than £11,000 in income and the other earns between £11,001 and £43,000, you may wish to transfer 10% of your income tax allowance to your spouse or civil partner. This will save £220 in income tax. You can also make a backdated claim for last year. This would give a total refund of £432.
  2. You should review the total income you expect to receive in this tax year. Is it as tax efficient as it could be? If you are drawing income from shares there is now a £5,000 pa tax-free allowance for dividend income, however, higher and additional rate taxpayers may pay higher rates on dividends above this level.
  3. It is important that you review your capital gains and losses. The tax-free allowance of £11,100 has to be used by 5 April. Realising gains and losses each year can reduce the total tax you pay on your investment growth.
  4. Be sure to use your allowance for tax-free ISA savings. Adults can add up to £15,240 before 5 April and £20,000 from 6 April 2017. Under 18's can save £4,080 this tax year rising to £4,123 next tax year.
  5. Depending on your circumstances, you may be able to apply for some form of lifetime allowance protection. This can be a very complex area and advice is usually required to determine the most suitable option for your needs.

    Up to 5 April an allowance of up to £1.5 million is available for those with pensions in excess of £1.25 million as at 5 April 2014.

    The lifetime allowance is now £1 million. If you have funds in excess of this additional tax charges may apply to the excess.

    There are other forms of lifetime allowance protection you may be able to apply for to reduce the impact of this tax. For example, if you had pensions worth more than £1.25 million as at 5 April 2016, you can apply for an allowance between £1.25 million and £1.5 million, based on their value as at 5 April 2016.
  6. If you have taxable income over £100,000 there are tax benefits in making additional pension contributions or gift aid donations which may restore your personal tax allowance. This may provide an effective rate of relief of 60%, making retirement saving and charitable giving more affordable.
  7. Parents of children under 16 (or age 20 if still in education) receive child benefit, a tax-free benefit, unless either of the parents has income of £50,099 or more.

    If your income is over this threshold, making pension contributions and charitable gifts can restore eligibility for this.
  8. You may wish to review your options for paying pension contributions as it is proposed that from 6th April 2017, those who have already flexibly accessed their pension benefits, may only pay pension contributions of up to £4,000 per year (without incurring tax charges). This can also be a complex area and if you think you may be affected by the change, speak to us.

    Your allowance for tax relief on pension savings of up to £40,000 pa is granted at your highest income tax rate. Relief not claimed can also be carried forward for up to 3 years after the end of the tax year but drops off each 5 April.

    If your taxable income is more than £110,000 you may have a reduced allowance. Using up earlier years relief will be even more important to you, so it is best to act well before 5 April.
  9. If you are already over State retirement age, you have a one-off opportunity to buy an additional State pension of up to £25 per week but you need to act before 1 April. 
  10. Make sure to review the gifts you have made over the tax year and consider whether you wish to make any additional gifts.

    Up to £3,000 per tax year can be gifted as one-off capital sums and will be exempt from inheritance tax. This is in addition to gifts made on marriage and small gifts below £250 per donee.

    Allowances not used in the tax year can be carried forward for 1 year.

If you have any questions please do not hesitate to contact your adviser.


Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser.

Share this article:
Back to News & Views