Reducing Tax: Actions Ahead of April 6
There is still time to reduce your tax bill and changes today can protect yourself from future tax liabilities. you have until 6 April to action any of these five options, it’s not too late if you act fast.
With increased NI from the Health and Social Care Levy from 6 April 2022, many directors are considering paying themselves a bonus or voting a dividend prior to 6 April to arrange a lower tax bill essentially. We wrote on this recently in our blogs managing NI Rise from April 2022 and also tax efficient director bonuses.
Whether you want to consider topping up your ISA (to a max of £20k a year) or set up a lifetime ISA to save up for your first home or for later life (if you are under 40), this could be a way to save up to £4,000 of your ISA allowance per year until you are 50 and benefit from a 25% government top-up too. See Lifetime ISA at Gov.uk. Speak to your financial advisor or to our team at LHP for advice on this to ensure your unique position is dealt with correctly.
Making bigger pension contributions can help you reduce your tax bill. This applies if you are at the higher rate or an additional rate tax payer. For high earners on say £100k per year, pension contributions are particularly efficient as they can give you effective tax savings of 60%. Speak to us at LHP about this to ensure you don’t go over your annual pension contribution limits which would have an undesired effect! See our blog using your pension fund for a tax-efficient loan too.
Giving money to charity can give you a tax benefit as well as benefitting the charity. This will apply if you are a higher rate or additional rate taxpayer and there is no annual limit on what can be gifted. See also tax relief when you donate to a charity.
The current standard capital gains tax annual exemption of £12.3k applies to everyone. For larger gains you can transfer assets to a spouse to use their allowance and you can sell shares or unit trusts. Tax rules apply here where you cannot buy back same investments immediately – take the advice of one of our tax experts before you act on this alone to avoid issues. See also our blog declaring your gain correctly.
Talk to us at LHP for advice on your most suitable options to make the most of your tax efficiency. Let’s Talk.