The time you have to deal with your tax affairs fairly is precious before the tax year ends. We suggest not to leave your planning of tax for the last moment. The allowances are too valuable to lose before they are expired and it’s too late to take advantage of them. You need to have an understanding of personal tax planning tips so that you can ensure to plan for the future more efficiently.
The Popular Personal Tax Planning Tips Before the Tax Year Ends
In this guide, we will cover the most popular personal tax planning tips which will help you to protect your future and handle your tax matters more fairly than you ever did. It has been observed that professionals often suggest doing a few things before your tax year comes towards an end.
They will ask you to focus on ways to maximise your ISA and consider your junior saving accounts, your pension amount, dividend allowance, and other tax allowances. We have gathered the common tax planning tips for you suggested by the professionals.
Make Gifts To Loved Ones
In case you are dealing with the potential inheritance tax bill and you aim to remove it or at least reduce it, the most simple way to deal with it efficiently is to gift it to your loved ones. Sounds confused as to how it may work for your benefit?
Well, when a person demises, a certain percentage of IHT is due on your estate in case the amount crosses the limit provided for married couples or civil partners. Now if you plan accordingly to reduce your IHT estate part, you can gift it to someone in your family during your lifetime.
Capital Gains Tax Allowance
We all know that you do not have to pay the capital gain tax on the annual exempt amount. However, in the case the profits are going above the given limit, you be charged. You can plan the selling of your valuable and qualifying assets according to the situation that may benefit you the most. It will be worth it even if you have to delay to get the most out of your capital gain tax allowances.
Utilise Your Dividend Allowance
It is allowable to get an amount of dividend allowance that is income tax-free when you are a shareholder or an investor. It is advisable to make the most benefit from such allowances while the offer is still one for you as an investor or shareholder. If you get this opportunity to make the income from dividends because you are involved in business investment, this means you will be able to gain income that is tax efficient.
Pension and Annual Allowance
There are a few limitations to the amount of money that you can pay for a pension in a tax-efficient way. This is considered as the annual allowance as well. The taxable income and annual allowance are set almost equally and dealt with accordingly too. For the case of such individuals who earns a higher income, The annual allowance will automatically turn low. You can seek professional help if you are not sure about making the most of your available allowances.
If you find yourself in the position to qualify for carrying forward an unused annual allowance, this will be a chance to maximise your benefits from the amount of your pension. This will be a good plan for your retirement, you should not be hesitant in doing so.
Junior Individual Savings Account (JISA)
In this case, you have the privilege to be grandparents and you have your grandchildren living with you. You must take Junior Individual Savings Account (JISA) into serious consideration. You will experience the tax benefits just the same way you get from the Adult ISA. It is allowed for you to pay for JISA until your grandchild turns 18. However, you need to know that your grandchild is allowed to take control at 16 as well.
Before the child turns 18, there is no permission granted for cash withdrawals. Consider using all the amount in the tax year because if you do not do so, you will lose the amount and it will not be rolled over for the next year. This is known to be a great help for the grandparents.
Maximise Your Individual Savings Account
In the case of an individual saving account, the rule is just similar to the junior saving account. If you do not use the amount of moment in the current tax year, this will not be carried forward and you will lose it. So it is advisable to use the allowance every year and make the most out of it. Because this is not a tax-efficient way to keep the amount saved as it will not be rolled on into next year.
The Bottom Line
In conclusion, we can sum up the discussion of personal tax planning tips by saying that the most valuable time to get the benefits from allowance is to use the amount of allowance in the current tax year. You need to keep a focus on what can roll on to next year and what can not.
This planning should be considered before the tax year ends and do not wait for the eleventh-hour hassle. We hope this blog has helped to develop a better understanding of handling tax planning with the popular tips and you will be able to make the most out of your allowance amount in the most tax-efficient way.
Get in touch with one of our experts if you are stuck with your sales or value-added tax. We will ensure to provide instant help.
Disclaimer: The information about the personal tax planning tips provided in this blog includes text and graphics in general. This does not intend to disregard any of the professional advice.