It is hard to believe coming into the end of another tax year.. and we’re still talking about Brexit. My guess is we’ll still be talking about Brexit every tax year from now on. (I’m just joking… I really hope I’m joking).
As ever, there are a number of options you should be thinking about at this time of year. Please don’t leave it until April 5th – most providers have cut-offs that finish in late March so action needs to be taken.
1 – Pensions – very tax effective, contribute from either your personal account or employer (or your own limited company), access from 55
Who should do this? Everyone! But becomes just up the priority list if you’re 50 or over and still working and/or a higher-rate tax payer.
Limits? £40,000 per year which falls to £10,000 if total earnings are > £210,000.
2 – ISAs – the building blocks of all investment plans. All gains & income are tax-free. Very flexible, can be withdrawn for other use at any time.
Who should do this? If you have extra savings that you don’t feel are working hard enough, then ISAs make sense. Also if you have cash ISAs you’re not taking advantage of the tax-free growth so they can be switched into investment ISAs without impacting the limit.
Limits? £20,000 per person per year. It’s use-it-or-lose-it
3 – VCTs/EIS – Government supported investing into small, growing companies. Tax relief of 30% on investment, all gains & income are tax-free. Higher risk unlisted companies, 5 year lock-in period. Potential to defer other CGT gains with EIS.
Who should do this? Higher earners who have either maxed out their pension contributions or are looking for smaller, really interesting investment stories.
Limits? £200,000 for VCTs and £1m for EIS.
4 – Capital Gains Tax allowance – if you hold taxable investments you can crystalise profits each year for tax-free gains.
Who should do this? Everyone who holds taxable investments. If/when you sell down the whole position, but taking small gains along the way you are reducing the overall tax burden
Limits? First £11,700 of capital gains are tax-free for 2018/19
These are the basics – there are many others that could be relevant to your circumstances. Get in touch to see if we can help.