It may be winter outside but the end of the tax year will soon be upon us. The UK is unusual in not having a tax year which is based on the calendar year. We have the French to thank for this. During the Napoleonic Wars our Government ran out of funds and so the tax year end was moved from 31st December to 5th April, to allow the raising of extra taxes. Two hundred years later we still maintain this practice.
While this offers the advantage of being able to celebrate Christmas and the New Year without having to think about tax planning, the same is not always true of Easter. This is further complicated by the fact that the timing of Easter, which is linked to the lunar calendar, changes each year and can be any time from 22nd March to 25th April.
For financial planners and their clients an early Easter, as we have this year (Good Friday is 30th March), also cuts into the time left to help make the most of tax allowances and tax incentivised savings.
With only 4 weeks before then, we would remind you of our New Year Tax Tips and the key actions highlighted in Money Makeover for 2018.
Those who have not yet topped up their ISA for the current tax year may also need to act soon, to avoid missing out on tax free savings opportunities. If you are not sure whether to opt for a cash or equity ISA we explain the choices in Cash or Stocks and Shares- Which ISA is right for you?
If recent market volatility has made you think about when is the best time to invest in your ISA see Timing Your ISA Investments.
If you are a non earner, high earner (£100,000 income or more), plan to draw your pension next tax year or will soon be 75, this could be the year for you to top up your pension and the 5 April deadline will mark the cut you off point for this year’s contribution and the right to carry forward relief from 3 years ago. See Using Your Pension Allowance Before 5 April Could Be Crucial.
If you have lost child benefit due to you or your partner’s earnings exceeding £50,099 this tax year, our blog How Saving for Retirement can Restore Child Benefit, explains how paying extra into a pension may enable you to claim this back. Again action before 5th April may be required.
If you are a higher rate taxpayer, have exhausted your pension and ISA allowances and can afford to take a high risk and a long term view, tax incentivised venture capital trusts and enterprise investment schemes are a highly tax efficient way of investing. As they are concentrated in small start up companies there is a high probability of loss of capital, so not suitable for everyone.
Gifting capital sums to others is also tax efficient but tax free allowances can only be carried forward for one year see Gifts With Lasting Appeal.
Finally if you wish to make charitable donations, which can also reduce your higher rate tax bill, see our blog Making Gifts To Charity More Valuable.
For a personal consultation on how to be more tax efficient please consult your usual adviser or email firstname.lastname@example.org
Director of Public Policy, LEBC
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 or product for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest. The Financial Conduct Authority does not regulate tax planning. Tax rates and allowances may change in future.Back to News & Views