In just three short months the present tax year – 2020-21 – will end midnight, 5th April 2021.
The UK’s tax code is predominantly time-limited. Any reliefs and exemptions from UK taxes for 2020-21 will mostly expire at the end of the tax year. Accordingly, there is an imperative to review your tax affairs before this date to ensure that available reliefs are utilised or that penalising tax charges are legitimately avoided.
For example, for 2020-21:
- Every UK taxpayer is allowed to realise £12,300 of taxable gains without being subject to a Capital Gains Tax charge. Any unused allowance cannot be carried forward.
- For Inheritance Tax purposes there are a range of gifts that can be made tax-free.
- Taxpayers with income exceeding £100,000, perhaps for the first time, may have an opportunity to reduce the impact of the loss of their personal tax allowance and avoid a marginal Income Tax rate of 60%.
There is still time to consult with your pensions adviser to see if you could make additional contributions within the permitted limits. This may be the last year that higher rate tax relief is allowed if the Chancellor makes expected changes to restrict this relief in the forthcoming budget.
Clearly, we all have different personal and financial circumstances so there is no one-size-fits-all approach that can be taken. There are no guarantees that you could take advantage of current exemptions and reliefs, but please call if you would like to discuss your options.
If you would like to discuss this article in more depth, please contact DSC Accountants today.