Uncertainty is the name of the game so far during this tax year, with post-Budget U-turns and a rushed pre-election Finance Act losing the majority of the government’s proposed tax changes.
Those proposals include the reduction of the dividend allowance from £5,000 to £2,000, making tax digital legislation, the introduction of deemed domicile for all taxes and the reduction of the money purchase annual allowance from £10,000 to £4,000.
With another election a distinct possibility and a second Budget already promised for this autumn, it’s not easy to keep focused on regular tax-saving opportunities across personal, family and business financial planning.
So here are just a few ways that you could to save tax.
Married couples or civil partners who are basic rate taxpayers can transfer up to £1,150 for 2017/18, so it’s always worth reviewing arrangements.
Landlords of let property should try to minimise the impact of the new restriction on tax relief for finance costs. For 2017/18, 25% of finance costs are subject to basic rate restriction, dropping to 20% by 2020/21.
3. Estate planning
The new residence nil rate band came into force from April. An additional band of £100,000 (eventually rising to £175,000) is only available where a residence is inherited by direct descendants or where a property passes to certain types of trust. It’s a good time to review a will or other estate planning provisions.
4. Savings and investments
The tax-free dividend allowance is currently £5,000 for all taxpayers. However, it is still expected to be reduced to £2,000 from April 2018, so is likely to have an impact on investment and business planning.
The new Lifetime ISA (LISA) allows those between 18 and 40 to save towards retirement or a first home purchase with an added bonus. If circumstances are right, a LISA might be the right savings vehicle.
6. Your business
Get ready for making tax digital (MTD). Although the relevant legislation was not included in April’s Finance Act, the timescale for MTD implementation is unlikely to be delayed.
7. Employment and remuneration
Employers need to review the tax effectiveness of their salary sacrifice schemes. From 6 April 2017, most of the tax and NIC advantages of using many salary sacrifice arrangements have been removed. Pension contributions, however, remain exempt.
For tax planning help and independent Pension and Investment advice, get in touch.