End of tax year action points for pensions, tax planning and child benefits
21 March 2018
Action is required by those saving into pensions, tax planning and those receiving child benefits, says Kay Ingram, Director of Public Policy at LEBC.
Ingram points out that clients need to act soon to avoid missing out on tax-free savings opportunities, particularly with an early Easter this year cutting into the end of tax year time frame, but also there are implications for pension savers, those looking to exploit tax planning opportunities and those with young children.
“If you are a non-earner, high-earner (i.e. earn an annual income of £100,000 or more), plan to draw your pension next tax year, or will soon reach the age of 75, this could be the year for you to top up your pension; the 5 April deadline will mark the cut off point for this year’s ISA contribution and the last point at which you can exercise your right to carry forward relief from three years ago,” says Ingram.
She continues: “If you have lost child benefit because your earnings or your partner’s earnings exceed £50,099 in the current tax year, paying extra into a pension may enable you to claim this back. Again, action before 5 April may be required.
“If you are a higher rate taxpayer, have exhausted your pension and ISA allowances, and can afford to take a high-risk and longer-term view, tax incentivised venture capital trusts and enterprise investment schemes are a highly tax-efficient way of investing. As they are focused on smaller start-up companies, there is a higher probability that investors may suffer a loss of capital, so they are not suitable for everyone.”
Finally, Ingram reminds that gifting capital sums to others is also tax-efficient; however, tax-free allowances can only be carried forward for one year and would be first-time buyers looking to secure a £1,000 supplement to their savings from the Government need to act fast in opening a Lifetime ISA.
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