What to do before the end of the tax year
Make sure you don’t miss the deadline to claim important allowances and reliefs.
The end of the tax year is fast approaching and there are a number of valuable allowances and reliefs that will be lost if they are not used before the deadline. We summarise these allowances below and suggest areas to review before 5th April 2019.
CAPITAL GAINS TAX (CGT) ALLOWANCE
Current tax year: £11,700
From next tax year: £12,000
INDIVIDUAL SAVINGS ACCOUNT (ISA) ALLOWANCE
Current tax year: £20,000
From next tax year: £20,000
JUNIOR ISA ALLOWANCE
Current tax year: £4,260
From next tax year: £4,368
Review your pension contributions for the current tax year, and look to utilise any unused annual allowance from the previous three tax years. This could be particularly important if you are subject to the tapered annual allowance, which restricts the amount of tax relief on contributions that can be made by higher earners in the current tax year.
Annual allowance: £40,000
Non-earners, including children and grandchildren, benefit from basic rate tax relief on contributions to pensions. If you make a payment of £2,880, this will result in a gross contribution of £3,600 being applied to the pension.
IHT GIFT EXEMPTION
All individuals have an annual IHT gift exemption of £3,000, and it is also possible to carry forward any unused allowance from the previous tax year. If you are planning to make gifts, a proportion may be covered by the annual exemption and can, therefore, be made without any IHT implications.
INCOME AND EXPENDITURE
Review your income and expenditure, as gifts made from disposable income are potentially IHT exempt. There is no limit to the amount of the gift that can be made as long as it is intended to be regular in nature, is not from capital, and does not affect your current standard of living.
Please contact us for any futher information.
These figures are based on current rules and our understanding of what the allowances will be in the next tax year.
Statements concerning taxation are based on our understanding of the taxation law in force at the time of publication. The levels and bases of taxation may change. You should obtain professional advice on taxation where appropriate before proceeding with any investment. Readers should seek professional advice for their individual circumstances.
Wealth Planning Director
Jonathan joined in 2016 and is a Wealth Planning Director, providing advice to clients on pension and tax planning issues. Previously he worked at RBC, HSBC, and a privately owned wealth management firm specialising in advice to financial services professionals. Jonathan has 20 years’ experience, is a Fellow of the Personal Finance Society and a Chartered Financial Planner.
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.