We are now very close to the end of Income Tax year ending 5 April 2022 but there is still time to implement a few steps which may help reduce tax liabilities and protect wealth for some of our clients so therefore please have a look at the points below and if they are applicable to you, there is still just about time to act.
- Annual pensions allowances
If you are a higher rate taxpayer, you can reduce your tax liability by making pension contributions up to a total of £40,000. If you have spare funds, then it is far more attractive to get tax relief at higher rates.
- Individual Savings Account (ISA) allowances
Tax free saving products like ISAs have not been of enormous value over recent years because of the appalling low interest rates, but interest rates are now rising. Up to £20,000 per adult can be subscribed to an ISA before midnight on 5th April.
Making investments for children when they are young, (and the younger the better), is a powerful tool which can generate large funds by the time they reach adulthood. Up to £9,000 a year can be paid into a junior ISA and also pension contributions up to £2,880, which are topped up to £3,600 can be made for children, even if they have no tax liabilities.
- Capital Gains Tax allowances
Not that many people are likely to have capital gains on a regular basis but each person can make capital gains tax free up to £12,300 per annum. It is far better to make a £12,300 gain today and then another £12,300 gain in early April rather than a £24,600 gain after 6 April, which will give rise to tax. Also, if you have capital gains liability this year, it might be worth disposing of other assets which would give rise to a loss which could offset the gain.
- Other tax-friendly investments
Subscriptions can be made to venture capital trusts which offer 30% Income Tax relief on new share issues can be offset against Income Tax liability during the tax year of purchase. Therefore, if this relief is attractive, there is still time to use these vehicles.
- Gifts to reduce Inheritance Tax
There are many urban myths surrounding Inheritance Tax liabilities but if you are likely to have an Inheritance Tax liability, and wish to make gifts to family, you can make gifts up to £3,000 each year and it will not be counted as part of your Estate.
It is appreciated that these measures will not apply to many people at all but if anybody would like further information, then please do not hesitate to contact us.