A YEAR END TAX PLANNING CHECKLIST – KEY POINTS TO CONSIDER

Check list

Forget Brexit and Goal Keeper substitutions for something far more important

We may all have been transfixed recently by BREXIT, BAFTAS, BRITS and OSCARS and even the return of Alan Partridge but one thing is for sure, taxation and in particular, the end of the tax year is fast approaching and may need your attention. The following came to us yesterday via our Continuing Professional Development team, may not be relevant to all but may act as a useful reminder to some. Remember Act now before the 5th April.

Personal tax

·         Pensions:  Have you used the carry forward rules in order to benefit from any unused allowances from the previous three tax years?  This is generally the difference between £40,000 and the pension input each year.
·         Charitable donations:  If you are a higher rate taxpayer make sure that these are under Gift Aid so that you obtain additional tax relief.  The charity will also be able to reclaim the basic rate tax from HMRC.  Note also the Gift Aid payments can be carried back for relief in the previous tax year.
·         Reduction in personal allowance:  For every £2 that adjusted net income exceeds £100,000 the £11,850 personal allowance is reduced by £1. Pension contributions and Gift Aid can help reduce adjusted net income and save tax at an effective rate of 60%.
·         ISAs:  Have your used your maximum annual investment of £20,000 for 2018/19?
·         Junior ISAs and pensions:  Have you thought about investing for your children or grandchildren by setting up Junior ISAs or pensions?  In the 2018/19 tax year, you can invest £4,260 into a Junior ISA for any child under 18 who does not have a Child Trust Fund.
·         Capital gains:  Have you used your 2018/19 annual exemption of £11,700?  Consider selling shares where the gain is less than £11,700 before 6 April 2019.  If you have worthless shares consider a negligible value claim to establish the capital loss.  You may even be able to set off against your income.
·         Enterprise Investment Scheme (EIS) investments:  If you are looking for investment opportunities, have you considered EIS, which offers income tax relief of 30 per cent as well as capital gains tax relief?
·         Seed EIS investments (SEIS):  These investments offer income tax relief of 50 per cent and a capital gains tax exemption on disposal.  There is also a capital gains tax reinvestment relief on 50 per cent of a capital gains realised on the disposal of any assets during 2018/19 when it is reinvested into a SEIS qualifying company.
·         Venture Capital Trust investments:  These investments also provide income tax relief of 30 per cent, as well as tax free dividends.
·         Inheritance tax (IHT):  Have you made use of your annual exemptions?  The general annual exemption is £3,000 (plus last year's £3,000 exemption if you did not use it).  Also consider making regular gifts of your income to minimise the growth of your estate that will be liable to IHT.

This guide is for general information only and not does substitute specific advice.  You should not rely on it as specific advice and Grugeon Reynolds limited cannot accept any liability for its contents.  If you need guidance please contact us.