The 5 April 2018, is the next key marker for tax advisors, the end of the current tax year. Why is this date especially important?
Each tax year, taxpayers are granted a number of tax-free allowances, exemptions and reliefs, and in most circumstances, if you don’t take advantage of these reliefs they are lost; they cannot be carried forwards. Basic allowances for 2017-18 include:
Income Tax:
- Personal tax allowance – £11,500
- Personal savings allowance – £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
- Dividend allowance – £5,000. This is the last year that this generous tax-free allowance is available, from 6 April 2018 it is reducing to £2,000.
National Insurance:
- The employment allowance of £3,000 is available to set-off against employer’s Class 1 secondary contributions subject to certain restrictions.
Capital Gains Tax:
- Annual exempt amount, individuals can accrue chargeable gains of £11,300 (trusts £5,650) in the tax year without paying this tax.
Annual Investment Allowance:
- Sole traders, partnerships and companies can invest up to £200,000 in qualifying capital expenditure and set this off against their taxable profits.
Inheritance tax:
- Annual gifts out of capital £3,000 (this gift allowance can be carried forward for one year).
- Small gifts allowance, £250 per recipient.
- Parental gift on marriage, £5,000.
- Grandparent or party to marriage, £2,500.
- Other gifts on marriage, £1,000 per donor.
Savings
- Annual ISAs – you can invest up to £20,000 in a tax-sheltered ISA. The limit for Junior ISAs is £4,128.
This is by no means a complete list, what it does help to illustrate is the need to work through a basic check list of reliefs to ensure that you have organised your tax affairs for 2017-18 in such a way that you can make the most of reliefs available.
We can help. If you have not considered your tax planning options for 2017-18, call now to organise a planning meeting.