By Ola Sulaimon
THE tax year in the UK runs from 6 April to 5 April and, as we are approaching the start of a new year, I have taken a look at tax planning ideas for business owners and individuals to help them save tax.
Tax Planning Tips
1. Tax code: This code is a very important set of numbers as it determines the amount of tax an individual has to pay.
Check your tax code to ensure that it is correct. For most individuals in the UK, it would be 1200L and, if this has been adjusted, check if this is correct. If you are not sure call HMRC just to ensure right code has been used.
2. Tax timing for selling capital items or other income:
If you are planning to sell capital items that will result to capital gain time, the best time to sell is after 6 April 2019 because capital gains tax would not be due before 31 January 2021. This also applies to issues like when a dividend is paid, or loan interest is applied.
3. Fully using your annual pension contributions
When individuals in the UK contribute into pensions, their tax band will be extended which means they will pay more tax at 20 per cent rather than 40 per cent or 45 per cent. However, there is an annual allowance of £40,000 on which the individual can enjoy tax relief in a year.
If you feel you have missed out in the last tax year then the good news is that it's not too late because you can carry over the unused allowance from the last three tax years
To be able to carry over the unused allowance, the individual must be a member of a UK registered scheme in the relevant tax year.
4. Transferring assets to spouse or civil partner before disposal
When spouses or civil partners transfer assets between each other, it is usually tax free for capital gains tax. The issue here is if the asset is owned by both of them, they can then apply their capital gains tax annual exemption of £11,700 to their profit from disposal and therefore pay less tax.
If your tax is planned well in advance, it helps to save money you could use for other important things for yourself and family.
To find out more contact Ronzl Accountants Ltd, 51 Billing Road, Northampton. Call 01604 965826 or see the website at www.ronzlaccountants.co.uk