1. Savings Income
Receive £1,000 of savings income tax-free if you are a basic rate taxpayer, and £500 if paying tax at the higher rate. If you or your partner has little or no earnings or pension income, you may also benefit from a 0% tax rate on up to a further £5,000 of savings income. Moving assets between you may make the best use of these limits, minimising tax on your savings income. Similarly, £5,000 of dividend income is tax free, regardless of your tax status, so re-organising your shareholdings may help save tax.
2. Company Car
Review whether a company car is worth having – the tax on all cars will increase in 2017/18, with further substantial increases over the next three tax years. Switching to a company car with very low CO2 emissions will save you and your company tax and NICs, as well as reducing other costs.
3. Capital Gains Tax
Transferring assets between married couples or civil partners before their disposal may save capital gains tax (CGT) where one partner has an unused annual exempt amount, has not fully used their basic rate tax band, or has capital losses available. It’s generally an advantage to leave as much time as possible between the transfer of the assets and their subsequent sale.
4. Pensions Tax Relief
Effective tax relief on pension contributions can be as high as 60% where the personal allowance is being withdrawn, and can be even higher if tax credits are being withdrawn. Pension payments also attract higher rates of relief if, for example, they stop the loss of child benefit or result in some of dividends no longer being subject to higher rate tax.
5. ISA Allowances
The maximum investment limit of £15,240 for 2016/17 applies across all three types of individual saving account (ISA): cash, stocks and shares and innovative finance. In each tax year money can be invested in one type of account or split between the three. The limit will increase to £20,000 for 2017/18. ISAs are free of UK tax on investment income and capital gains, and there is a wide choice of investments. The innovative finance ISA was introduced from 6 April 2016, bringing peer-to-peer lending within the ISA net.