With 6 weeks to go until the end of the Tax Year, it is time to make the most of your tax allowances this year. The first step to making the most of your tax allowances can mean looking closely at your pension. UK residents under 75 can add money to a pension and receive tax relief on it. You’ll automatically get basic rate tax relief (currently 20%) paid into your pension by the government.
If you pay tax at a higher rate you could get up to a further 25%, but you’ll need to claim it by declaring any pension contributions you’ve made on your tax return.
To make the most of your pension, you need to know the Pension allowances that you are entitled to. If you have not used them to the full, there may still be time to top them up – and start planning on how you will use them next tax year.
The annual allowance is the maximum you can invest in your pension each year that would be eligible for tax relief. It is currently £40,000, or your entire income, whichever is the smaller and there are lifetime allowances to consider.
If you run a limited company then there are some actions you could consider such as dividend and salary planning, purchasing capital items to maximise capital allowances, research and development tax credits and a range of other matters.
Please talk to us about pre-tax year end planning for your business and for specific pension planning advice, we can refer you to an independent financial adviser.