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Tax tips for the year end: Individuals

30 Nov 2015

2 minute read

With the year end fast approaching, here are our top tips to help you make the most of the tax-saving opportunities available to you and your business ahead of 5 April 2016.

Utilise your 2015/16 ISA allowance

Adults can invest in any combination of cash or stocks and shares ISAs up to the overall annual subscription limit of £15,240 in 2015/16. However, a saver may only pay into a maximum of one Cash ISA and one Stocks and Shares ISA each year. Junior ISAs, for children aged under 18, allow annual investment of up to £4,080. You have until 5 April 2016 to make your 2015/16 ISA investment.

Saving for a first home? The Government’s new Help to Buy ISA, offers unique incentives for first-time buyers. The account enables individuals to save monthly deposits of up to £200, with an opportunity to deposit an additional £1,000 when the account is first opened.

The Government will then provide a 25% bonus on the total amount saved, including interest, capped at a maximum of £3,000 on savings of £12,000, which is tax-free.

The bonus can only be put towards a first home located in the UK with a purchase value of £250,000 or less, or up to £450,000 in London.

Plan to avoid the ‘hidden 60%’ income tax band

Personal allowances are scaled back if ‘adjusted net income’ exceeds £100,000. The personal allowance is reduced by £1 for every £2 of income in excess of that limit. This means that an individual with adjusted net income of £121,200 or more will not be entitled to any personal allowance. This gives an effective tax rate on this slice of income of 60%. If your income for 2015/16 is likely to fall within this band, talk to us about your options – you might, for example, delay income into the next tax year or increase payments into a pension.

Organise a tax-efficient estate plan

Early planning can help to reduce your liability to inheritance tax (IHT) through, for example, a plan for tax-efficient lifetime gifts and a tax-efficient Will. There are a number of IHT reliefs available, while certain small gifts can be made free of any IHT liability. Annual transfers not exceeding £3,000 are also exempt (and any unused amount may be carried forward to enhance the following year’s exemption).

For more information on minimising your tax liability ahead of the year end, please contact a member of our Personal Tax Team on 01865 292200.

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