Carl Taylor Senior Consultant

Believe it or not, 5th April is on the horizon. The end of the tax year is near

This is a great opportunity to stop and think about what you can do to minimise your personal tax liabilities before the tax year finishes.

There’s potentially many things you could do, but we’ve put down 4 key tax planning points that we feel will be most relevant.

Here are four tax planning points:

Use your £1K savings allowance

The personal savings allowance means that basic rate taxpayers don't pay tax on the first £1,000 of savings income (higher rate taxpayers don't pay tax on the first £500 of savings income). It's worth looking at charging interest on directors' loan accounts.

Potential Saving: £160 to £480 (per couple)

Use the £5K dividend allowance

Make sure all shareholders get at least £5K in dividends! Even if they have a significant other income (e.g. partnership profit share or employment income), you can still utilise the £5K allowance.

Potential Saving: £800 to £4200 (per couple)*

Personal pension contributions

If you are a partner in a partnership with high personal profits - pension contributions can be a good way to reduce your tax bill. Ensure you make the cash payments before the 5th April, and make sure you remember to claim them on your tax return!

Potential Saving: £16000 to £32000 (per couple)**

Charitable planning

Again if you have high personal profits or income - another way to reduce your tax bill is to make personal Gift Aid donations. Please note this is different to donations made from a limited company. Generally speaking, if you are in a corporate structure, donations are best made out of the company.

Potential Saving: 25% of charity donations*** Example: A donation to a registered charity of £10,000 would save £2500 in tax***

These are just a few simple ideas to save on tax before the end of the tax year.

In this article, we have mentioned potential savings of nearly £39,000 for a couple! In practice, you might not be able to take advantage of all of these, as there are different circumstances involved, but hopefully we have given you a few ideas!

If in doubt, please ensure you take proper advice.

* Based on opportunity cost of basic rate dividends or salary income
** Based on utilising maximum pension annual allowances and assuming saving tax at 20% or 40%
*** Based on income taxed at 40%