{"id":188,"date":"2022-04-14T13:20:37","date_gmt":"2022-04-14T12:20:37","guid":{"rendered":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/?p=188"},"modified":"2022-04-14T13:20:37","modified_gmt":"2022-04-14T12:20:37","slug":"10-things-to-do-to-save-tax-in-the-new-tax-year","status":"publish","type":"post","link":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/10-things-to-do-to-save-tax-in-the-new-tax-year\/","title":{"rendered":"10 things to do to save tax in the new tax year"},"content":{"rendered":"
    \n
  1. Check your PAYE tax code<\/strong><\/li>\n<\/ol>\n

    The tax code is the identifier that tells an employer how much tax should be deducted from people’s salaries\u00a0when they get paid.<\/p>\n

    It\u2019s important to check your tax code. If you have multiple employers or pension providers, you may get more than one tax code.<\/p>\n

    If you\u2019re on the wrong one, you could be paying HM Revenue & Customs\u00a0more than you ought to be. On the other hand, you risk getting penalised if you\u2019re paying too little.<\/p>\n

      \n
    1. Transfer part of your personal allowance<\/strong><\/li>\n<\/ol>\n

      Married couples and registered civil partners are permitted to share 10 per cent\u00a0of their personal allowance between them.<\/p>\n

      The unused allowance of one partner can be used by the other, meaning an overall combined tax saving.<\/p>\n

      The amount people can transfer in the current tax year is \u00a31,260 but transfers are only available to those on the basic rate of income tax.<\/p>\n

        \n
      1. Tax-free savings and dividend allowances<\/strong><\/li>\n<\/ol>\n

        For 2021-22, savings income of up to \u00a31,000 is exempt for basic rate taxpayers, with a \u00a3500 exemption for higher rate taxpayers. The tax-free dividend allowance is \u00a32,000 for all taxpayers.<\/p>\n

        Married couples and registered civil partners could save tax by ensuring that each person has enough of the right type of income to make use of these tax-free allowances.<\/p>\n

          \n
        1. Contribute to your Isa and Junior Isa<\/strong><\/li>\n<\/ol>\n

          Savers should start putting money in their Isa and Junior Isa early and benefit from tax-free\u00a0capital gains and income.<\/p>\n

          You can put the entire amount into a cash Isa, a Stocks & Shares Isa, or a combination of both.<\/p>\n

          The fund builds up free of tax on investment income and capital gains until your child reaches age 18, when the funds can either be withdrawn or rolled over into an adult Isa. Relatives and friends can also contribute to your child\u2019s Jisa, as long as the limit\u00a0is not breached.<\/p>\n

          For adult Isas the contribution limit remains at\u00a0\u00a320,000, whereas for Jisas it is \u00a39,000.<\/p>\n

            \n
          1. Utilise any capital losses<\/strong><\/li>\n<\/ol>\n

            If\u00a0capital gains and losses are realised in the same tax year, the losses are offset against the gains before the capital gains tax exempt amount is deducted. The exempt amount for 2021-22 is \u00a312,300.<\/p>\n

            Capital losses will be wasted if gains would otherwise be covered by your exempt amount.\u00a0You could consider postponing a sale that will generate a loss until the following tax year, or alternatively realising more gains in the current year.<\/p>\n

              \n
            1. Maximise pension contributions<\/strong><\/li>\n<\/ol>\n

              The annual allowance for pension contributions before a tax charge is incurred is currently \u00a340,000.<\/p>\n

              It is possible to carry forward\u00a0unused allowances from the previous\u00a0three tax years, as long as the amount does not exceed 100 per cent\u00a0of the taxpayer’s earnings.<\/p>\n

              But savers need to be aware of the\u00a0money purchase annual allowance, which takes effect if they have started to take money out of their pension plan. This is currently \u00a34,000, after being reduced from \u00a310,000 in 2017.<\/p>\n

              The annual allowance is also reduced for taxpayers\u00a0who have ‘adjusted income’ over \u00a3240,000 a year, when it reduces by \u00a31 for every \u00a32 earned over that threshold.<\/p>\n

                \n
              1. Pay pension contributions to save NI contributions<\/strong><\/li>\n<\/ol>\n

                If you pay pension contributions out of your salary, both you and your employer must pay NICs on that salary. When your employer pays a contribution directly into your pension scheme, the employer receives tax relief for the contribution and there are no NICs to pay \u2013 a saving for both you and your employer.<\/p>\n

                The process is called salary sacrifice and sees the employee forego\u00a0part of their\u00a0salary or bonus to make a bigger pension contribution.<\/p>\n

                However, reducing earnings via salary sacrifice can impact entitlement to income-related employer and government benefits and so may not be appropriate for everyone.<\/p>\n

                  \n
                1. Make a will and review it<\/strong><\/li>\n<\/ol>\n

                  When dying without a will, a person’s assets are divided between their relatives according to the intestacy rules.<\/p>\n

                  The surviving spouse or registered civil partner may only receive a portion of the estate, and inheritance tax will be due at 40 per cent\u00a0on anything\u00a0above \u00a3325,000, or up to \u00a3500,000 if the residence nil rate band is available.<\/p>\n

                    \n
                  1. Consider leaving\u00a0some of your estate to charity<\/strong><\/li>\n<\/ol>\n

                    If a person leaves at least 10 per cent\u00a0of their net estate to charity, the IHT on the remainder is charged at 36 per cent\u00a0instead of 40 per cent.<\/p>\n

                    Wills and estate planning can be very complex areas, and you should ensure you speak to a certified wealth planner to ensure you receive\u00a0professional advice to understand what\u2019s right for you and your situation.<\/p>\n

                      \n
                    1. Make use of IHT-free gifting and\u00a0exemptions<\/strong><\/li>\n<\/ol>\n

                      Under the IHT marriage exemption parents can each gift\u00a0\u00a35,000 to their children in consideration of the marriage, free of IHT. Grandparents can also\u00a0make an IHT-free gift of \u00a32,500 for a grandchild\u2019s wedding and registered civil partnerships attract the same exemptions. Furthermore, the marriage exemption can be combined with the \u00a33,000 a year IHT exemption. This allowance can be carried forward for one year if unused.<\/p>\n

                      Remember, you and your spouse or registered civil partner can each give \u00a33,000 out of your capital every tax year, in addition to gifts you make out of your regular income.<\/p>\n

                      On regular gifting, as long as you establish a pattern of gifts that can be shown to be covered by your net income, without reducing either your capital assets or your normal standard of living, these gifts will be free of IHT.<\/p>\n

                      The recipients of the gifts in this case need not be the same people each year.<\/p>\n","protected":false},"excerpt":{"rendered":"

                      Check your PAYE tax code The tax code is the identifier that tells an employer how much tax should be deducted from people’s salaries\u00a0when they get paid. It\u2019s important to check your tax code. If you have multiple employers or pension providers, you may get more than one tax code. If you\u2019re on the wrong… <\/p>\n

                      Read more…<\/a><\/p>\n","protected":false},"author":2,"featured_media":193,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,11,10,8],"tags":[86,83,85,84],"class_list":["post-188","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-advice","category-financial-planning-advice","category-investing-your-money","category-pensions-advice","tag-ni-contributions","tag-paye","tag-pension-contributions","tag-personal-and-dividend-allowance"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/posts\/188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/comments?post=188"}],"version-history":[{"count":0,"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/posts\/188\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/media\/193"}],"wp:attachment":[{"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/media?parent=188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/categories?post=188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.independentfinancial-advisor.co.uk\/financial-advice-blog\/wp-json\/wp\/v2\/tags?post=188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}