New Year’s Resolutions to Save Tax
New Year’s Resolutions to Save Tax: Planning
New Year’s Resolutions to Save Tax – At this time of year we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April. An obvious tax planning point would be to maximise your ISA allowances for the 2020/21 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2021 as the unused annual pension allowance is lost after three years. For those looking to do some inheritance tax planning, it would be a good time to review (or make) your Will.
New Year’s Resolutions to Save Tax: Pensions
For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer. Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused.
Hence the unused pension allowance for 2017/18 will lapse on 5 April 2021 if unused.
Reviewing your Will
Top of the to do list for many individuals is to make or update their will. Many think this is something to leave until later in life but it is important to get things in place once property is acquired or when children come along. In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.
Passing on the Family Home
One recent change that should be taken into consideration when drafting your Will is the additional Inheritance Tax (IHT) nil rate band for passing on the family home to direct descendants on death. We can work with your solicitor to make sure your Will is tax efficient.
Help and Advice
Please talk to us about any of the above information or if you would like to discuss any tax matters.
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