Tax Preparation Specialist Offers Recommendations for Making the Most of Tax Allowances before Tax Year End
With yet another tax year about to come to a close on 5th April 2019, taxpayers in the UK have been offered expert guidance on maximising their various tax-free allowances before the end of the tax year. Tax preparation specialist David Redfern, Managing Director of DSR Tax Refunds Ltd, provided his timely advice in order to assist taxpayers in making the most of the various tax efficiencies available to them in the 2018/19 tax year.
The tax year runs from 6th April to 5th April the following year and personal allowances and tax-free allowances also run from tax year to tax year. Redfern’s first piece of advice is for taxpayers to check that they are claiming all of the tax-free allowances they are entitled to claim before the end of the tax year. He states “Taxpayers are entitled to a number of tax-free allowances which allow them to maximise their tax relief on investments and savings so it is essential to good tax planning to ensure that households make full use of these allowances where possible. Individual taxpayers are allowed to invest up to £20,000 per tax year in an ISA, or a range of ISAs, with a couple having a combined allowance of £40,000 between them and these tax-free savings allowances can’t be carried over to the following tax year. This means taxpayers should investigate whether they are using their full allowance”. There are 4 types of ISA – Cash, Stocks and Shares, Innovative Finance and Lifetime. The £20,000 ISA allowance can be split over a number of different types of ISA, although there is an annual ISA allowance limit of £4,000 for Lifetime ISAs.
As with tax-free savings allowances, pension contributions are also subject to an annual tax-free allowance. Redfern states “Taxpayers are allowed to save up to £40,000 per tax year tax-free through private pension contributions. If you’re not sure how much you have paid into your pension during this tax year, the GOV website has a handy calculator to allow you to check whether you have used all of your personal allowance for any given tax year. While you can carry forwards some unused personal allowance, there are certain circumstances where this is not allowed – such as in the case of a money purchase annual allowance – and you can only carry over unused allowances from tax years where you have been paying into a pension”. Redfern added that careful consideration should be given to private pension contributions in cases where a taxpayer is subject to the High Income Child Benefit Charge because pension contributions can be used as a way of reducing net income.
Redfern also encouraged taxpayers to check whether they are receiving all the tax relief they are entitled to. He added “If you are entitled to Marriage Allowance because either you or your spouse have earnings below the personal tax allowance, you can transfer your unused Marriage Allowance to the spouse earning above the personal tax allowance. This can be backdated for up to 4 years – but if you want to backdate your claim for tax year 2014/15, you need to act now because time is running out”. Marriage Allowance can be worth up to £238 per tax year by allowing the low-earning spouse to transfer up to £1,190 of unused personal allowance to their spouse. It is open to all couples who are either married or in a civil partnership as long as the higher-earning partner is a basic-rate taxpayer. Taxpayers were also reminded to check they were making the most of their Gift Aid contributions in order to maximise their tax relief options, with tax relief on charitable donations also able to be backdated for 4 years.
Redfern stated “The forthcoming tax year will see a rise in the personal allowance from £11,850 to £12,500 per year as well as the higher rate threshold rising to £50,000 and those who have used disguised remuneration packages will be liable for the newly-introduced loan charge but taxpayers still have a little over two weeks to make the most of the current tax year before we dive headlong into a new tax year”.
About DSR Tax Refunds Ltd
DSR Tax Refunds Ltd are a firm of tax rebate specialists serving clients nationwide. DSR Tax Refunds are tax preparation experts who specialise in identifying potential allowable expenses for tax rebates for clients. Their specialist team can help employed and self-employed subcontractors with all relevant paperwork to ensure their claim is handled in an accurate and efficient manner.
For more about DSR Tax Refunds, visit https://tax-refunds.co.uk/
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