Tax Planning Thoughts - February 2019
As the end of the 2018/19 tax year approaches, the following 'housekeeping' suggestions may improve tax efficiencies and utilise allowances that might otherwise go unused -
Pension Contributions and Annual Allowance
- Pension contributions can attract tax relief from 20% to 60%;
- Carry Forward of previous years unused Annual Allowances means that it may be possible to contribute more than the £40,000 annual allowance;
- Don't forget that pensions still remain outside of the Estate for Inheritance Tax purposes!
Retirement Planning and the MPAA
- If you are considering taking pension benefits flexibly, the amount you can contribute to a Pension may reduce to £4,000 per annum as you may be subject to the Money Purchase Annual Allowance;
- Prior to this there can be opportunities to maximise pension contributions.
ISA Allowance
- ISA Allowance is £20,000 and funds within an ISA is free of income tax and capital gains tax;
- Contributions may be made to Cash and Stocks & Shares ISAs.
CGT Allowance
- Crystallising capital gains up to the £11,700 limit is very tax efficient;
- Investing the funds in an ISA or Pension can increase tax efficiency further.