The end of the tax year is fast approaching and time is running out.
So in the weeks ahead of the April 5th deadline, what steps should you be taking to make the most of your money and reduce your tax bill?
Here are just a few areas you could look at.
Use your ISA allowance
You can save or invest up to £20,000 a year with a cash ISA, a stocks and shares ISA, or a combination of the two, tax-free.
If you haven’t invested this amount by April 5th, you can’t carry your allowance over and you’ll end up missing out.
Top up your pension contributions
You can pay up to £40,000 into your pension in a single tax year before you have to pay tax on it (subject to earnings and carry forward availability), so if you aren’t particularly near to this limit, diverting some money into your pension could be a good way to mitigate your wider tax bill.
Use Your Capital Gains Tax allowance
If you sell assets or personal possessions that are worth more than £6,000 – apart from your car – you must pay tax if the proceeds exceed £12,300.
Genuine gifts from a civil partner or spouse don’t count towards the allowance, so it’s worth checking where potential tax savings could be made.
Use your dividend allowance
A dividend allowance is an amount of dividends that you don’t have to pay tax on, which is currently £2,000. So, if you’re a company director or shareholder, you can receive up to this amount tax-free. Dividends through a Stocks and Shares ISA are tax-free.
Use your Personal Savings Allowance
This allowance lets you earn interest on your savings without paying tax on it, but the size of the allowance depends on your income tax rate.
If you’re a basic rate taxpayer (20 per cent), you can earn £1,000 in savings interest per year tax-free, while higher rate taxpayers (40 per cent) can earn £500 in savings interest per year with no tax. Additional rate taxpayers (45 per cent) don’t get an allowance.
This is by no means an exhaustive list, and many of these options may not even apply to you.
That’s why it’s definitely worth speaking with a professional, regulated financial adviser with experience in this field. They can talk through the choices open to you to help you make the right decisions.
April 5th isn’t far away, so don’t delay!
