Tax planning ideas ahead of the 5th April 2020 deadline

How to Make the Most of Your Tax Reliefs and Allowances

We hope all our clients and contacts had a peaceful Christmas and New Year and entered 2020 with plenty of optimism.

As part of the suite of tax services we offer, TAG Accountants Group like to advise our clients to think ahead to ensure they have minimised their tax liabilities. To that end, we have set out below a few areas to think about before the end of the current tax year.

Budget now set for 11th March 2020.

Chancellor of the Exchequer Sajid Javid’s post-election Budget is set for 11th March and will set the agenda for the new Tory government. Whilst at this point it is uncertain what the Budget will contain, areas likely to be covered include the following:

Key tax measures left in limbo in the run-up to the election:

• Extending the “off-payroll” working rules to the private sector – this will almost certainly proceed, even if not from 6th April 2020, and thus businesses and workers affected should prepare for the planned changes.

• Restricting R&D repayable credit for SMEs.

• The proposed 2% reduction in P11d car benefits.

• Limiting CGT private residence letting relief – it may be worth considering the disposal of a property that currently qualifies for this relief before 6th April 2020.

In addition, based on manifesto promises, we expect to see:

• An uplift in the NIC threshold

• Potential discounts of up to 30% for first-time buyers

• Review of tax relief on pensions and entrepreneurs’ relief which the new Government has promised to reform.

If you feel you need to undertake any planning ahead of these changes, we are here to help.

Some end of tax year planning considerations.

Aside from the Budget, there are other areas to consider ahead of the end of the tax year:

• An obvious tax planning point would be to maximise your ISA allowances for the 2019/20 tax year (currently £20,000 each).

• You might also want to consider increasing your pension savings before 5th April 2020 as the unused annual pension allowance is lost after three years. For most taxpayers the maximum pension contribution is £40,000 each tax year, depending on their earnings and any unused allowance for a particular tax year may be carried forward for three years and can be added  to the relief for the current tax year, but then lapses if unused.

So, the unused pension allowance for 2016/17 will lapse on 5th April 2020 if unused. Pension planning now might be sensible if the Government is planning to review tax relief on pensions.

• As regards inheritance tax planning, this could be a great time to review (or even make) your Will. Do not forget that there is currently a very generous exemption from inheritance tax for regular gifts out of income. 

Furthermore, when fully phased in from April 2020, an additional nil rate band of up to £175,000 is available on death where your residence is left to direct descendants. This means it is timely to look at your inheritance tax exposure.

Would you like some help with any of that?

If you wish to maximise these reliefs, we recommend that you take professional tax advice.

TAG Accountants Group can help you and your business plan in order to ensure any future taxes will be kept to a minimum. To get started, please call 01902 783172 to discover more about how our specialist tax services team could guide you through the entire process or alternatively, just complete our contact form HERE.

We very much look forward to helping you.