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Maximising opportunities before the end of the tax year

Maximising opportunities before the end of the tax year

We know that all our clients at Creaseys are focused on achieving their 'Big Picture'. Whether that is growing your business, saving for retirement, or passing wealth down to the next generation, there are plenty of opportunities to consider ahead of 5 April 2022 which can help push you closer towards that goal.

Business owners

There are several alternatives for extracting profits from your company: salaries, dividends, and pension contributions. A well thought out remuneration strategy will ensure you are maximising your allowances, managing the timing of tax liabilities and meeting your business objectives.

For example, are you taking advantage of the tax-free dividend allowance? Are you receiving the optimum level of salary to clock up a qualifying year towards your state pension and benefits, but without attracting a National Insurance liability? How much can you contribute to your pension whilst retaining tax relief?

Income tax rates on dividends and the rates of employees’ and employers’ national insurance contributions all increase by 1.25% from 6 April 2022. Tax savings could be obtained by paying bonuses and dividends before the end of this tax year.

Pension contributions

The tax relief available for pension contributions is valuable, but your annual allowance limits the amounts you can contribute without incurring a tax charge. This limit is also tapered to as low as £4,000 depending on your level of income.

Your annual pension contributions should be carefully reviewed. For example, have you considered whether you are utilising your full annual allowance for the previous three tax years? Do you risk over contributing and incurring unnecessary tax charges?

Inheritance tax and gifting

You can make gifts of up to £3,000 per year without any inheritance tax implications. Gifts exceeding this amount could potentially form part of a taxpayer’s estate liable to inheritance tax and advice is recommended where significant gifts are planned.

If you are considering charitable giving, capital gains tax reliefs could be available on the gift of assets in addition to gift aid income tax relief.

Capital gains tax

Individuals can realise gains of up to £12,300 in 2021/22 tax-free by utilising their annual exemption. This cannot be rolled forward to future years.

We regularly advise our clients around capital gains tax, including maximising reliefs available on disposal and planning between spouses/civil partners. You may want to consider transferring an asset to your spouse/civil partner to utilise their annual exemption, or you may want to delay a disposal until after 5 April to push the deadline for paying any capital gains tax due back a year.

ISAs

Are you making full use of your ISA allowance? Individuals can save a maximum of £20,000 per year, while Junior ISAs currently have an allowance of £9,000. Unused ISA allowances do not roll over, so if you don’t use it, you lose it.

What next?

Get in touch with your usual Creaseys contact or call us on 01892 546546 to discuss how we can help you take advantage of these opportunities. In our experience, tying your financial goals back to your 'Big Picture' is a great way to help you gain clarity and really start making positive progress toward meeting your objectives.