It’s almost April, and that means three things:

  1. Spring is on the way and you can start hoping for sunshine
  2. Supermarket shelves are full of Easter treats and chocolate
  3. The 2017/18 tax year is ending

The new tax year might not bring the excitement and celebrations (or bank holiday) that the calendar New Year does, but it’s an important time to make sure that you are up-to-date financially.

Your March checklist

Throughout March, you should check that you have made the most of the annual exemptions and allowances available. Keep your money working efficiently for you by checking that you have:

Made smart Inheritance Tax (IHT) decisions

If you are starting to think about leaving a legacy behind, make sure that you are using the annual gift exemption each year. You can give gifts of up to £3,000 in each tax year, which will not be subject to IHT if you pass away within seven years.

It is also possible to carry forward any excess for one year. So, if you did not use your entire exemption in the 2016/17 tax year, you should use that before the tax year resets in April. However, this also means that you could plan to carry any excess over from this year to use throughout the 2018/19 tax year.

Read more about financial gifts and IHT liability in our previous blog.

Used your Annual Allowance

There is an annual limit to the contributions you can make to your pension each year whilst still benefiting from tax relief. This varies from £4,000 (if you have already started to draw a pension) to £40,000, depending on your income. (Source: The Pensions Advisory Service)

If you have already reached this limit for 2017/18, you may be able to use any leftover allowance from the past three years. That means that you could have until April 6th to make use of any remaining allowance you had in 2014/15.

Planned for Dividend Allowance changes

The Dividend Allowance will change in April, meaning that in the 2018/19 tax year you will pay tax on any dividends you take above the £2,000 allowance. This will fall from £5,000. If this is something that is likely to affect you, it is wise to start planning for that now.

Used the Capital Gains Tax allowance

This year, you can release profits of up to £11,300 with no Capital Gains Tax (CGT) liability.  CGT is payable on money made through the disposal or sale of certain assets, including secondary properties and investments outside  ISAs and pensions.  It is important that you try to use as much of this allowance as possible each year, as it does not transfer or roll over.

Maximised your ISA (Individual Savings Account) deposits

In April 2017, the ISA limit increased from £15,240 to £20,000, which means that you could have an additional £4,760 available to deposit. In addition, make sure that you are fully utilising the limits on other types of ISAs you hold, including:

  • Lifetime ISA (£4,000)
  • Junior ISA (£4,128)

ISA allowances do not roll over and any leftover allowance simply disappears when the tax year ends. Make sure you are using it to its full potential where possible.

Claimed Married Couple’s Allowance

If you are married, you can claim Married Couple’s Allowance to reduce your household tax bill. To claim you or your partner must:

  • Be married or in a civil partnership
  • Be living with your spouse
  • Have been born before 6th April 1935

The allowance is calculated using only one income. If you got married before 5th December 2005, it will be the husband’s. For marriages and civil partnerships which started after this date, the highest earner’s income is used. (Source: Gov.uk)

If you were born after 6th April 1935, and are married, you could claim Marriage Allowance instead.

You will be eligible for Marriage Allowance if:

  • You are married or in a civil partnership
  • You have the lower income
  • You earn less than £11,500
  • Your partner earns more than £11,501 and less than £45,000.

The allowance means that you can transfer £1,150 of your Personal Allowance to your spouse, so that they are able to pay less tax on their earnings.

It may be possible to back-date these allowances, so be sure to check your eligibility when you apply.

As we approach a new tax year, there’s no better time to seek help from a financial planner. By engaging with a professional at the beginning of a new tax year, you can be confident that your financial plan will align with any changes and allowances which are available to you during 2018/19

Ready to get started? Get in touch with Ben.