Tax planning opportunities

In the run up to the new tax year, there are tax planning opportunities that you may wish to consider. The planning tips set out in this section are based upon existing statutory reliefs.

  • Shared Personal Allowance: If your spouse is not utilising all of their personal allowance, it is possible to transfer 10% of their personal allowance to the other spouse. This can reduce the other spouse’s tax bill by £220. This is not possible if the other spouse is a higher or additional rate taxpayer.
  • Dividends: For owner managed businesses, review the level of your dividends. If possible, declare a dividend of £5,000 to utilise the zero rate dividend tax-free allowance.
  • ISA: Make full use of your annual ISA allowance which is currently £15,240 for the year ended 5 April 2017.
  • The personal allowance is reduced by £1 for every £2 of taxable income above £100,000. Therefore consider making gift aid payments or pension contributions to reduce your taxable income below this £100,000 threshold.
  • Consider making investments into SEIS or EIS companies and claiming income tax relief on your investment.
  • Review your investment portfolio to look to realise chargeable gains to utilise your capital gains tax annual exemption of £11,100.
  • Look at how assets are owned, and whether it would be beneficial to transfer some assets into joint names to make use of your spouse’s personal allowance and basic rate bands. For example bank accounts could be put into joint names, rental properties (where there is no mortgage) or gift of shares in a family business.
  • Consider transferring assets into joint names so that if and when the assets are sold, there will be two capital gains annual exemptions available to offset any chargeable gains.
  • If you have already made a chargeable gain in excess of the annual exemption, you could consider selling assets at a loss to offset against any capital gains realised in the year.
  • Review all your investments to see if any of them have become of negligible value. If so, it may be possible to make a formal claim to crystalise the capital loss.
  • Make gifts of up to £3,000 per year to fully utilise your annual inheritance tax allowance.
  • Consider whether you have any surplus income which could be gifted to family members. If there is an established pattern for making regular gifts out of income then these gifts are not subject to inheritance tax.

For further information please get in touch with Latha Rodgers or Tim Adcock.

Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority for investment business