Tax year end planning 2019 – quick checklist

With tax year end just around the corner, it’s time to check you are making the most of your tax reliefs and allowances to save for a brighter future. There’s a lot to think about.

We’ve created a checklist of our top 10 tax year end planning opportunities to explore, together with the key information you need to make these a reality. Plus, if you find these tips useful, you can download our free in depth guide to tax year end planning by clicking here.

1. Utilise private pension tax relief

Additional and higher rate taxpayers may wish to contribute an amount to maximise tax relief at 40%, 45% or even 60% (where personal allowance is reinstated) while they have the opportunity.

Those with sufficient earnings can use carry forward to make contributions in excess of the current annual allowance. Last chance to benefit from the potential double annual allowance for 2015/16 before it drops off the carry forward radar: it’s a case of “use it don’t lose it” before tax year end.

High earners: making a pension contribution before the Tax Year End could increase your annual allowance. 

Some high income earners will face a cut in the amount of tax-efficient pension saving this tax year. The standard £40,000 AA is reduced by £1 for every £2 of ‘income’ clients have over £150,000 in a tax year, until their allowance drops to £10,000.

But it’s possible that some of these clients may be able to reinstate their full £40,000 allowance by making use of carry forward. The tapering of the annual allowance won’t normally apply if income less personal contributions is £110,000 or less. A large personal contribution using unused allowance from the previous 3 tax years can bring income below £110,000 and restore the full £40,000 allowance for 2018/19. And some of it may attract 60% tax relief too.

2. Maximise your ISA savings

ISAs offer savers valuable protection from income tax and CGT and, for those who hold all their savings in this wrapper, it’s possible to avoid the chore of completing self-assessment returns.

The ISA allowance is given on a use it or lose it basis, and the period leading to the tax year end, often referred to as ‘ISA season’, is the last chance to top up. Savings delayed until after 6 April 2019 will count against next year’s allowance.

3. Allowances and child benefit

Pension contributions reduce an individual’s taxable income. In turn, this can have a positive effect on both the personal allowance and child benefit for higher earners resulting in a lower tax bill. An individual pension contribution that reduces income to below £100,000 will restore your client’s full tax free personal allowance. The effective rate of tax relief on the contribution could be as much as 60%.

Child Benefit is clawed back by a tax charge if the highest earning individual in the household has income of more than £50,000, and is cancelled altogether once their income exceeds £60,000. A pension contribution will reduce income and reverse the tax charge, wiping it out altogether once income falls below £50,000.

4. Reduce your Inheritance Tax Bill

In addition to the inheritance tax (IHT) standard nil rate tax band (currently £325,000) a resident nil rate tax band has been introduced from 6th April 2017. In short, this means you can pass on up to £1million to linear descendants through your family home.

5. Business Owners: Take profits as pension contributions

For many directors, taking significant profits as pension contributions could be the most efficient way of paying themselves and cutting their overall tax bill. There’s no NI payable on either dividends or pension contributions. Dividends are paid from profits after corporation tax and will also be taxable in the director’s hands. By making an employer pension contribution, tax and NI savings can boost a director’s pension fund.

Employer contributions made in the current financial year will get relief at 19%, but the rate is set to drop to 17% in 2020. So those business owners who cannot fund a pension every year may wish to pay sooner rather than later, if they have the profits and the cash available.

6. Special Investments & Tax Incentives

Business owners have long benefited from Inheritance Tax (IHT) savings and now private investors can too. This is one of several tax incentives available to support investment into small UK companies. Unlike gifts and Trust arrangements which usually only achieve IHT savings after 7 years, a BPR investment is effective after just 2 years.

7. Exploit your Capital Gains Tax Annual Exemption

Clients looking to supplement their income tax-efficiently could withdraw funds from an investment portfolio and keep the gains within their annual exemption.

Even if cash isn’t needed, taking profits within the £11,700 CGT allowance and re-investing the proceeds means there will be less tax to pay when clients ultimately need to access these funds to meet spending plans.

If there is tax to pay on gains at the higher 20% rate, a pension contribution could be enough to reduce this rate to the basic rate of 10%.

8. Bonus/Employer Pension Contributions

‘Exchanging’ a bonus for an employer pension contribution before the tax year end can bring several benefits. The employer and employee NI savings made could be used to boost pension funding, giving more in the pension pot for every £1 lost from take-home pay.

9. Boost Family Wealth

You can also pay up to £3,600 into the SIPP of a non-tax payer such as a non-working spouse or a child under the age of 18. As with your own pension, you would be entitled to pension tax relief on any contributions made. This means you would only need to contribute £2,880 of your own money to reach the £3,600 annual limit as the government would add the extra £720.

10. Make a Charitable Donation

Charitable donations are generally tax free and those made through Gift Aid entitle the charity to an extra 25p for every £1 you give. This doesn’t cost you extra, Gift Aid assumes that the money has been already been taxed at the standard rate.

Effective tax planning is a year round job. It’s only at the end of the tax year that you have all the pieces to complete the planning jigsaw, but there are steps you can take now to get ahead of the game and give yourself time to put plans in place. And with less than 11 weeks until 6 April, there’s no time like the present to get started.

Begin by downloading our free guide to Tax Year End Planning below or call our experts on 01244 347 583 to arrange a free 1 hour consultation. Please note that we will send you the guide via email but will not send you anything further unless you give us permission to do so. 

  • Download Our Guide


*Please note that the information in this article and in our free guide is for informational purposes only and should not be taken as advice. You should contact an Independent Financial Adviser to discuss your personal circumstances before taking action.


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