Posted February 26, 2019

What tax savings could I make before the end of the year?

With over 40% of self-assessment tax returns expected to be submitted in January 2019, most people are focusing on filing their 2017/18 tax return on time. However, the 31 January also means that there are only 2 months left of the 2018/19 tax year.

And with one month to go now, there is still some time left to do some income tax planning for 2018/19. Here are some ideas that might be available to you:

Pension Contributions

If you aren’t already contributing the maximum amount into your pension you may wish to consider making additional pension contributions. Subject to certain limited you will receive tax relief on any contributions made, this could be up to 45p per £1 if you are an additional rate tax payer.

If you are in the position of having to repay child benefit or your personal allowance is being restricted pension contributions are taken into account when calculating your adjusted income so it may be worth increasing your contributions.

To receive the tax relief in 2018/19 the funds must have been paid into the scheme by the end of the tax year.

ISAs

The ISA allowance for 2018/2019 is £20,000, and interest earned on ISAs is tax free so if you have any funds sat in non-interest earning accounts why not use up your 2018/19 allowance.

Capital Gains

If you have a share portfolio where there are some significant gains you can use the Capital Gains Annual Exemption of £11,700 to realise these gains tax free. By selling some shares every year and fully utilising this allowance you can reduce your overall capital gains tax liability.

Gift Aid

Giving money to charity under the gift aid scheme can result in benefits for both the donor and charity. If you are a higher rate tax payer and give £8 to charity the charity will get a tax refund of £2 and you will get higher rate tax relief of £2. The cost of your gift will therefore be £6 but the charity will receive £10.

A word of warning, if you are not a tax payer and you elect to gift aid a donation HMRC will ask you to pay the tax on the donation that the charity has reclaimed.