Year-end tax planning
The end of the tax year is nearly here, but there is still time to save tax for 2016/17. Here are some areas to consider making the most of:
ISA Allowance
You can use your ISA allowance to save tax free. Investments and savings can be made up to a limit of £15,240 for the 2016/17 tax year. A saver may only pay into a maximum of one Cash ISA, one Stocks and Shares ISA and one Innovative Finance ISA per year. Savers have until 5 April 2017 to make their 2016/17 ISA investment.
Capital Allowances
Annual Investment Allowance
The AIA allows businesses of any size to claim a deduction of up to £200,000 of the year’s investment in plant and machinery; allowing businesses to be able to write off the costs of capital assets against taxable profits. However, there are provisions to prevent multiple claims, so please see us if you would like further information.
Pension Contributions
Pension contributions must be paid by the 5 April 2017 for them to be relieved against 2016/17 income.
Annual individual contributions are limited to a maximum of £3,600 (gross) or the amount earned which is eligible for tax relief; these earnings will be subject to the annual allowance, which is normally £40,000.
This figure is reduced for those with earnings over £110,000 and adjusted annual income (their income, plus both their own and their employer’s pension contributions) over £150,000. For every £2 of adjusted income over this figure, a person’s annual allowance is reduced by £1 (down to a minimum of £10,000).
Please get in touch for more detailed options on how you can minimise your tax bill.