The Quick, 6 Step End of Tax-Year Checklist 2018/19

21/03/2019 08:27:49

With the end of the tax-year rapidly approaching, here are just a few key things to be thinking about regarding your personal finances.

  1. Utilise your pension contribution allowance. This is currently a maximum of £40,000 for 2018/19 (subject to your earnings). However, you may also be able to carry forward unused allowance from the last 3 years.
  2. Higher earners can take steps to reduce their taxable earnings through pension contributions and charitable donations. Thus, benefitting from potential tax savings.
  • Bring your income to below the additional rate tax band, which starts at £150,000. This not only potentially saves you income tax at a rate of 45% but may also mean you regain a reduced pension input allowance.
  • People who earn over £100,000 start to lose their personal allowance by £1 for every £2 they earn over £100,000. Earn over £123,700 and your personal allowance is zero. In effect, translating to a 60% tax rate on this band of income.
  • Avoid losing Child Benefit, which is gradually removed if income is more than £50,000.
  1. Make use of your ISA allowance of £20,000 for 2018/19. The ISA allowance is lost at the end of the tax year.
  2. Utilise your annual Capital Gains Tax (CGT) exemption by realising gains of £11,700 in this tax year. If you have a large liability, you may look to realise gains over two or more tax years, or even use the tax-free interspousal transfer.
  3. Plan for inheritance tax. Inheritance tax has been described as the ‘voluntary’ tax as it can be mitigated with some proactive planning. Use your IHT gifting exemption of £3,000 for this tax year. This can be back-dated for up to one year if it wasn’t previously used.
  4. Ensure you have made the most of your allowances. Making the most of your personal allowance, savings allowance and dividend allowance will maximise tax-free income.

If you would like any advice or further information on the above, please don’t hesitate to get in contact.

Toby Bain DipPFS – Independent Financial Adviser 

The above is based on our understanding of UK Tax legislation 2018/19 and does not constitute a personal recommendation or financial advice.