The tax year ends 5th April 2013 so now is the time to review your financial affairs and take advantage of any remaining tax saving opportunities.
Timing expenses within the tax year
It may seem obvious, but if you make a tax deductible purchase before 5th April then you will get the tax relief in the current year, rather than having to wait another 12 months.
Higher rate taxpayers claim relief of 20%, and additional rate taxpayers 30% by declaring the donations in the self-assessment tax return.
For couples, it is advisable for whoever is the higher rate taxpayer to make donations under the Gift Aid scheme.
A capital gain is money received on the disposal of an asset such as shares or investment property.
The annual exemption is £10,600. Capital gains tax rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers.
Consider transferring the ownership of an asset to a spouse or civil partner if they pay tax at a lower rate before the sale.
Where a loss is incurred on an asset where capital gains tax would have been due, it is possible to carry the loss forward against any future gain. Special rules and time restrictions apply.
Individual Savings Accounts (ISA’s)
An ISA is a great way to save money exempt of income or capital gains tax. You can save up to £5,640 in cash; up to £5,640 in stocks and shares or £11,280 in just stocks and shares. Allowances not used will be lost.
The annual Child Trust Fund (CTF) allowance is £3,600 and can be cash or a combination with stocks and shares. The account is held in the child’s name that will have control of, and access to withdraw the funds when they reach 18.
Tax Rates and Allowances 2013/14
The personal tax free allowances increase by £1,100 to £9,205 saving the basic rate taxpayer £220 annually. Higher rate payers will not gain as the lower band decreases to £32,245.
Tax Planning Advice
Should you wish to discuss any of the above tax planning opportunities in regard to your individual circumstances please contact us.