Have you done all your year-end tax planning?

As we approach the end of the 2019/20 personal tax year on 5 April 2020, here are a few reminders of the simple things you can do to make sure that you keep your tax bill as low as possible.

Tax saving opportunities are generally centred around maximising the use of allowances, reliefs and exemptions, and using tax-efficient investments.

• Reduce taxable income below £150,000 to avoid 45% tax. Pension contributions are one of the few ways to reduce taxable income;
• If your income is marginally above £125,000 then pension contributions can reduce that income and restore all or part of your Personal Allowance which would otherwise be lost;
• For married couples/civil partners ensure each of you uses your Personal Allowance where possible;
• Redistribute investment capital between spouses/civil partners to potentially reduce the rate of tax suffered on income and gains;
• Reinvest in tax free investments such as ISAs to replace taxable income and gains with a tax free alternative;
• If you’re planning to dispose of an asset (other than residential property) which will give rise to a chargeable gain but want to delay paying tax on the gain, consider deferring the disposal until after 5 April 2020 (however see our article above about the changes on reporting and paying tax on residential property sales – you might want to accelerate the disposal to defer the tax!);
• To use two Capital Gains Tax Annual Exemptions in quick succession, make one disposal before 6 April 2020 and one after 5 April 2020;
• Don’t forget the Inheritance Tax annual £250 per donee exemption – it can’t be carried forward;
• To carry back an Enterprise Investment subscription for tax relief in 2018/19 it must be paid before 6 April 2020;

Consider making a net pension contribution of up to £2880 (£3600 gross) for members of your family, including children and grandchildren, who don’t have relevant UK earnings. The £720 basic rate tax relief added by HMRC is a significant benefit and the earlier that pension contributions are started, the more they benefit from compounded tax free returns.