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Kirk Rice Blog

Tax Reliefs To Use Before 5 April 2020- Don’t Miss OutWritten on February 12, 2020 by Kirk Rice LLP

Tax Reliefs To Use Before 5 April 2020- Don’t Miss Out

With the end of the tax year just a few weeks away, we set out below some tax reliefs that you might wish to utilise so as to benefit from the tax savings that may arise before it is too late.

Potential Tax Reliefs

  1. Each person has an annual exemption of £12,000 to set against their capital gains. This allowance cannot be carried forward or transferred to another person. So if you are thinking of selling or gifting assets and have a spouse/civil partner, speak with us to see if it is worthwhile transferring the asset to your spouse/civil partner before making any disposals, so as to utilise their annual exemption in addition to your own.

  2. Use up your £3,000 IHT gift exemption for the current year, and also use the same exemption from the previous year (2018-19), if you have not already done so. The exempt amount may be carried forward one tax year only, after which it is lost. With this in mind, Kirk Rice LLP can offer advice concerning inheritance tax planning, and if this is something you would like to explore, please contact us.

  3. Review your pension contributions (including those made via salary sacrifice and those made by your employer) to ensure that you can make full use of the annual pensions allowance. Remember that if you were registered in a UK pension scheme in the three years prior to 2019-20, you have the opportunity to use up any unused annual allowance. The carryforward is a ‘use it or lose it’ relief and this year is the last year in which you can use up the unused Annual Allowance from 2016-17. This is a complex area so; please speak with us or your IFA if you are unsure how much annual allowance is available to you.

  4. For non-earners and for children, it is possible to make net pension contributions of up to £2,880 in the year. The government will add £720 to this level of contribution, so the value of the pension fund increases to £3,600 gross.

  5. Contribute to your ISA. The ISA allowance for 2019-20 is £20,000, and for Junior, ISAs is £4,368. Remember that income or disposals within the ISA wrapper will be tax-free, but of course, you should check with either our Financial Services Team or with your IFA to ensure that this is a wise investment to make. Please contact Michael Powell (michael.powell@kirkrice.co.uk) if you are thinking of making such an investment.

  6. Make charitable donations via Gift Aid. If you are a higher rate or additional rate taxpayer, then you will gain relief on your donations.

  7. If you made capital losses in 2015-16, which you did not notify HMRC about, or you overpaid tax in that year, you have until 5 April 2020 to submit a claim to HMRC to notify them of the loss or reclaim the tax overpayment, after which the claim will be out of time.

  8. For enterprise investment scheme (EIS), seed enterprise investment scheme (SEIS) or venture capital trust (VCT) investments, consider making these sooner rather than later in order to generate an earlier tax repayment or to carry back the relief to the previous tax year. Remember that such investments carry risks and you could end up losing your investment, so you should consult Michael Powell in our firm, or your own IFA before investing in such companies.

 

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DOWNLOAD OUR 2019/2020 END OF YEAR TAX PLANNING GUIDE

DOWNLOAD OUR FACTSHEETS

INHERITANCE TAX

ENTERPRISE INVESTMENT SCHEME

PENSIONS TAX RELIEFS

CHARITABLE GIVING

SEED ENTERPRISE INVESTMENT SCHEME

VENTURE CAPITAL TRUSTS

TAXATION OF THE FAMILY

Finally, it is worth considering preparing your tax return earlier in the tax year so that should your tax liability have fallen from that in the previous year, the second payment on account becoming due by 31 July 2020 may be reduced (should you indeed fall within the payment on account regime). If, on the other hand, your tax liability has increased, an early understanding of this will allow you to budget for the additional tax to be paid by 31 January 2021.

Any reader interested in discussing how the this years tax reliefs and actions they could take with one of our Tax specialists can telephone 01344 875 000 or email info@kirkrice.co.uk.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. Tax treatment is based on individual circumstances and may be subject to change in the future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases or, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.

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