As we reach the end of March with the lockdown rules relaxing, you could be forgiven for neglecting the finer details of your finances. Every tax year, there are many ways we all can save money with our year end allowances, but we neglect to do so. Below, we’ve set out questions you should ask yourself before it is too late. These tips could save you a small fortune, so take a look:
- Have I made a donation to a Gift Aid registered Charity?
Not only does making a Gift aid Charity donation mean Charities can claim 25p extra for every £1 donated, but you as an individual can also claim tax relief on your personal earnings, if you are a higher rate tax payer. If you donate £100 via gift aid, increasing your donation to £125, you could potentially claim back £25 (£125 * 20%). More details can be found here: https://www.gov.uk/donating-to-charity/gift-aid
- Have I made my planned pension contribution?
Whether it is within your LTD Company or simply on your Self-assessment return, an extra pension contribution could potentially save you thousands. You can make up to £40,000 in pension contributions, tax free. Within your LTD Company, you could currently save 19% corporation tax on this. As an individual, even more if you are a higher rate tax payer.
- Have I utilised my tax free, dividend allowance for this tax year?
With every individual having a £2,000 tax free dividend allowance, it really is a use it, or lose allowance. Commonly, you will see Alphabet shares issued into spouses names, I order to fully utilise their own allowances and save as much tax as possible. This could net you £150 instantly.
- Have I utilised my full personal allowance?
With personal allowances currently standing at £12,500 before incurring income tax, we advise making the most of this. If you are able to declare any additional dividends or wages, even if you take them at a later date, do it. If you don’t declare them, they’re lost. Remember to check you tax code before it’s too late too! https://ameaccountingandco.com/new-tax-year-is-looming
- Have I utilised my ISA allowance for this tax year?
You can currently save up to £20,000 in an ISA. An ISA in a nutshell is a savings or investment account that you will never pay tax on. Particularly if you are a higher rate tax payer, this could save you thousands. These allowances once gone unused are lost forever.
- Have I maximised my full Capital Gain allowance?
Currently standing at £12,300 in gains before you pay Capital Gain tax, don’t let it go to waste. In many occasions, investors will sell one lump sum of invested items on the 5th April to the sum of their allowance and then another lump sum 6th April, to their allowance once again. This represents a very quick and efficient way of receiving tax free money and can be attributed for anything from; Shares, Crypto Currencies, Gold and more.
- The working from home allowance?
Whilst the working from home request has lessened, many of us have been doing so throughout 2020 and beyond due to COVID. Even if you worked just one day from home in this current tax year, you can claim the full amount of £6 per week for 52 weeks. As minimum, if you are a basic rate tax payer, you could claim £62.40 back in tax relief (£312 * 20%). Anyone can make their claim via HMRC on: https://www.gov.uk/tax-relief-for-employees/working-at-home .
- Gifting away to avoid inheritance?
Every year, you can make a small gift worth £3,000, which is known as the annual exemption form inheritance tax. This represents an efficient method of reducing the estate to inheritance tax purposes. If you miss this, you can roll it forward, but for only one year.
There’s a lot to think about, but it’s not too late. Do it whilst you can. If you’d like to discuss and more, contact us here at AME for a free consultation.