Are you paying too much tax?
For income tax purposes, the end of the present tax year is 5 April 2022. For tax planning purposes this is a key date in the tax calendar as any actions to save income tax (and possibly National Insurance) actioned after this date are likely be ineffective for 2021-22.
As we are approaching this cut-off date, 5 April 2022, we have listed below some of the issues that you may want to review:
Reasons to reduce taxable income for 2021-22
- Loss of your personal tax allowance. If your income is approaching and will exceed £100,000 for the first time this tax year, you would be wise to investigate if there are any strategies you could employ to keep it under £100,000; otherwise, you may lose all or part of your £12,570 personal tax allowance.
- Repayment of Child Benefits. If either parents’ income exceeds £50,000 all or part of Child Benefits may have to be repaid.
- Marriage Allowance. If married couples or civil partners are both basic rate income taxpayers, and one party has an underutilised personal tax allowance, part of the unused balance can be transferred to their spouse or partner.
Other income tax planning initiatives for 2021-22
- Maximise pension contributions.
- Claim for working from home.
- Minimise benefit in kind tax charges – for example, consider repaying petrol provided by your employer for private journeys and avoid the car fuel benefit charge.
- Maximise use of tax-free perks.
- Consider deferring bonuses for 2021-22.
Tip of the ice-berg
These tax planning ideas are not the full extent of the options that may be available to you. You might also like to read our year end tax planning guide which is available in our publications section.
The UK tax code is complex and riddled with grey areas. HMRC will be on your case if you under-declare income but may not be so forthcoming about the options you may have to reduce your income tax footprint.
To some extent, every taxpayer’s circumstances are unique and require individual planning.
If you would like to discuss your tax planning options for 2021-22, please call us on 020 7330 0000 where an expert, a real person is waiting to take your call.