The end of the financial year is in April, so now is a great time to look at your finances and make the best use of tax free allowances. There are a number of steps you could take.
If you have an ISA, have you utilised the tax-free ISA allowance of £20,000 for the 2020/21 tax year?
If you have a personal pension, you can pay in up to 100% of your salary or £40,000 (whichever is lower). You might be able to pay in more in certain circumstances.
Marriage Allowance is useful tax saving tool if you are married or in a civil partnership. This allows one person to transfer 10 per cent of their personal allowance to their spouse.
To benefit, one half of the couple must earn less than their annual personal allowance (currently £12,500). The other half of the couple (who will be transferring part of their allowance) must be a basic rate tax payer.
You can backdate your claim to include any tax year since April 2016 that you were eligible for Marriage Allowance. Indeed, if you spouse has died since this date, you can still claim.
Capital Gains can also be transferred between married/civil partnership couples to utilise both annual allowances.
There are annual inheritance tax exemptions on gifting money. You can give away up to £3,000 per financial year (if unused, this can also be carried forward to the following tax year). Also, you can give as many gifts of up to £250 per person as you wish during the tax year, as long as you have not used another exemption on the same person.
These are some of the many ways to mitigate your annual tax bill. For more information contact Proposito Financial Planning. Visit https://proposito.co.uk/, email firstname.lastname@example.org or call the Cirencester office on 01285 708444.