Experts at Dyke Yaxley have warned that time is running out to review tax arrangements before the end of the financial year.
Francesca Hutcheson, who is the Associate Tax Director here at Dyke Yaxley Chartered Accountants, in Shrewsbury, said:
“The current tax year will end on April 5, and we are firmly into the final quarter of the 2017/18 tax year. But if you act quickly, there is still time to review your taxable income and ensure that your tax affairs are structured as efficiently as possible.”
Francesca said the first step was to assess the taxable income you have already received in the current year and to consider taking up any unused allowances.
“In the next financial year, the dividend allowance will be reduced from £5,000 to £2,000, so you may wish to consider accelerating dividends into the current tax year if you haven’t already used your full £5,000 entitlement.
“The right remuneration package could mean tax-free income of up to £22,500 in this tax year, and £19,850 in 2018/19 – and for couples, that could be doubled depending on your circumstances.
“Higher earners must bear in mind too that their personal allowance will continue to be reduced by £1 for every £2 of net income over £100,000, so if your income is anywhere near that threshold, it may be worth considering ways to reduce your taxable income.”
Francesca said there were several possible steps to take before April 5, including making pension contributions, charitable donations, deferring income until 2018/19, and transferring assets to a spouse.
“Depending on your income, your child benefit could be affected this year too – it will be clawed back if you earn more than £50,000 a year, and if your taxable income reaches £60,000, you will lose the benefit altogether.”
She said property owners also needed to assess their position as the measures to restrict mortgage interest deductions for landlords increased further.
“If you do have any surplus cash, you could consider a number of tax-efficient investments which offer income tax relief at 30% or higher. But be careful as the value of investments can go down as well as up. The rules are also set to change and tax relief on low risk investments could be restricted in the future.
“Overall, the best approach is to take professional advice to review your tax situation sooner rather than later – that way you will still have time to adjust your tax affairs before the new tax year begins.”
Image: Francesca Hutcheson Associate Tax Director