Top tax planning tips from Yvonne Graham, Tax Manager at Ensors Chartered Accountants
- Review your dividend income and, if it exceeds the allowance for 2017/18 of £5,000, consider if you can transfer stocks and shares to your spouse as these are free of tax. Advice should be taken if you are considering this as you will need to be careful of anti-avoidance legislation.
- From 5 April 2018, the annual dividend allowance will reduce to £2,000 per person. If you receive dividends of more than this amount, this reduction could result in you having a tax liability. As a result you may need to register with HMRC to file a Self-Assessment Tax Return for the new tax year.
- If you considering how to manage potential Inheritance Tax (IHT) liabilities, remember that you can gift up to £3,000 of assets free of IHT in 2017/18 and, if your allowance wasn’t used in 2016/17, this rises to £6,000. Therefore, for a married couple, if you are able to use your maximum allowances at the end of 2017/18 plus at the start of 2018/19 you could potentially give £18,000 and save IHT of £7,200 for your beneficiaries. Gifts do not necessarily have to be in cash, however, please be aware that Capital Gains Tax may apply for gifts of non-cash assets.
- ISAs come in lots of shapes and sizes these days including the Help-to-Buy ISA, the Lifetime ISA, the Junior ISA as well as the original basic ISA. However, they all provide Income and Capital Gains Tax free investment. If you hold a basic ISA it is worth checking that you have invested the maximum of £20,000 before the tax year ends.
- The Capital Gains allowance in 2017/18 is £11,300. You may want to bring forward some sales so that the gains are covered by this allowance. Alternatively, is it possible to crystallise some losses before the end of the tax year as you can always carry them forward against future gains? Beware; there are restrictions for transactions with family members and HMRC do look closely at transactions where a transfer has occurred just prior to a disposal. We advise that specialist advice is taken if you are in any way unsure.
For further advice or help on any of the areas discussed above please contact Ensors or contact Yvonne direct.