Tax year end planning

19th March 2020


The current tax year will end on 5 April 2020, so now is the time to ensure that you have made best use of tax allowances and exemptions. Most allowances cannot be carried forward to the next tax year (although a new allowance will often become available), so they will be lost if they are not used.


If you have investments which you can sell at a profit, you can realise capital gains of up to the current annual exemption of £12,000 without paying tax. Alternatively, if you have loss-making investments you could sell the holdings to crystallise those losses which can then be carried forward and offset against gains in future years.


The ISA limit for the current tax year is £20,000 per person. Holding investments in an ISA means that income and capital gains are not subject to tax, so it is advantageous to make these investments as soon as possible after the start of the tax year to maximise the tax savings.


You can also contribute up to the full amount of your net relevant earnings into a personal pension, subject to an Annual Allowance of £40,000. Higher earners may have this annual limit restricted so that a lower amount qualifies for tax relief. Investments in a pension are not subject to income tax or capital gains tax, and there can also be inheritance tax benefits.


And finally, the new tax year provides an opportunity to make a tax return resolution. If you are one of the five million taxpayers who leave filing their tax return until January each year, trying to complete this earlier gives many benefits; any refund is paid to you sooner, you have plenty of time to budget for a tax liability and, perhaps most importantly, you avoid the stress of the last minute rush to avoid a late filing penalty.



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