With the end of the tax year looming there is still time to save tax for 2016/17. We have set out some points you may want to consider.
- Make full use of your ISA allowance.
ISAs can offer a useful tax free way to save, whether this is for your children’s future, a first home or another purpose. Individuals may invest up to a limit of £15,240 for the 2016/17 tax year. The three types of ISA into which this £15,240 allowance can be invested are a Cash ISA, a Stocks and Shares ISA and an Innovative Finance ISA (used for making peer-to-peer loans) per year. Savers have until 5 April 2017 to make their 2016/17 ISA investment.
- Take advantage of capital allowances.
By making the most of capital allowances, businesses may be able to write off the costs of capital assets against taxable profits. The Annual Investment Allowance allows businesses to claim a deduction of up to £200,000 of the year’s investment in plant and machinery (excluding cars). Businesses of any size and most business structures can make use of the AIA. However, there are provisions to prevent multiple claims.
- Build a tax efficient retirement plan.
Pension contributions must be paid on or before 5 April 2017 in order to be relieved against 2016/17 income. The Annual Allowance, or the maximum amount that can be saved tax-efficiently, is currently set at £40,000 (plus carry forward allowances from previous years). However, this figure is subject to tapering for high earners – broadly defined as individuals with ‘adjusted income’ of more than £150,000. ‘Adjusted income’ is your total income plus the value of any employer pension contributions made on your behalf.
This is only a selection of options that you may wish to consider as part of your tax planning strategy. For more information, and for advice on how we can help you to minimise your tax bill, please get in touch with your usual Ryecroft Glenton contact on 0191 281 1292.