February year end tax planning tips

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This month we are asking our tax and accounts managers to share their top tips for saving tax as the 2021/22 tax year draws to an end. These are the sort of things we are looking at with our clients in February and March:

Veronica Morgan in our Bristol office suggests:

  1. Top up your personal pension – and see if you can use brought forward relief from 2018/19, as any unused relief available from that your will expire on 5 April 2022;
  2. If you pay 40% or 45% tax, make sure you give us a list of your Gift Aid donations when we prepare your 2022 tax return as these will reduce your tax bill;
  3. The Capital Gains Tax allowance this year is £12,300 – but you need to use it by 5 April or it will be lost!

Kayleigh Carey in our Weston-super-Mare office shares these ideas:

  1. If you trade as a limited company with a 31st March year end, the most common accounting date, make the most of the 130% super deduction for new plant and machinery – buying new assets before 31 March will reduce the Corporation Tax due on 1 January 2023;
  2. A reminder that you only have 60 days to pay any Capital Gains Tax due when you sell residential property which isn’t your main residence, such as a buy-to-let;
  3. And if you are voluntarily registered for VAT (becasue your annual sales are under £85,000) make sure you’re ready for MTD for VAT on 1 April 2022 – if not, speak to one of us as soon as possible, it’s really urgent!
  4. Kayleigh adds that for the small number of property owner clients that the Annual Tax on Enveloped Dwellings (ATED) apples to need to be aware that they need to arrange a revaluation of their properties on 1 April 2022 as this is the next five-yearly revaluation date for this tax.

Teresa Furse in our Shepton Mallet office also recommends pension planning and Gift Aid to her clients, and added a couple more suggestions:

  1. Try to use your ISA allowance to take advantage of these tax-free savings. You can save up to £20,000 this year, and your spouse or partner can do the same, so that’s potentially £40,000 for your household. For younger investors, or those who are unable to save into a pension, ISA’s can be very useful – we can introduce you to a trusted local independent financial adviser to advise you on specific investments, just ask one of our team.
  2. If you own your own company, make sure you take the optimum dividend income this year. If you haven’t taken any dividends yet, remember up to £2,000 of dividends are tax-free so don’t miss out on that simple to use tax-saving opportunity. If you regularly take dividends, review your total income before 5 April and see if you can vote additional dividends to use up your Basic Rate tax band. Hint: you need to vote dividends by 5th April but they needn’t be paid until later if you don’t need the cash immediately (or the company can’t afford to pay them now).

We hope these suggestions have made you think about your tax affairs. These are the sort of tax reliefs and allowances that are only available until 5th April – it’s a case of “use them or lose them”. Some, like ISA investments or pension contributions, might need some time to arrange, so don’t leave it too long before you take advice on these. Your usual contact at Burton Sweet will be happy to talk to you about what’s most relevant to you, please give them a call.

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