Basic Income Tax reliefs
As we are now almost three-quarters of the way through yet another tax year it can be useful to consider the benefits of basic Income Tax reliefs. This will help ensure that your tax liability is no higher than necessary.
We have listed some of the main reliefs below:
Pension contributions - Tax relief for contributions to pension schemes is given at your highest marginal rate of Income Tax. You can get tax relief on private pension contributions worth up to 100% of your annual earnings subject to the annual and lifetime allowances. The income and gains which arise as part of your pension savings are generally exempt from Income Tax and CGT.
Charitable donations - Donations to charity over the course of a tax year can add up and you should ensure that you keep a proper record of all donations to record on your tax return. Donations that are made through the Gift Aid scheme allow for the recipient charity to claim 25p worth of tax relief on every pound donated. Higher rate and additional rate taxpayers are eligible to claim relief on the difference between the basic rate and their highest rate of tax.
Cap on Income Tax reliefs – There is an overall cap for certain Income Tax reliefs which is set at 25% of income or £50,000, whichever is the greater. The reliefs affected by the cap include trade loss reliefs, property loss relief, post-cessation trade relief and qualifying loan interest relief.
Business tax reliefs – There are also tax reliefs that may be available on certain expenses incurred in running your own business or if you use your own money to travel or buy things for your job.
Call now to organise a planning consultation prior to the tax year end
We can help you consider the financial planning opportunities that are available to reduce your tax bill. Also, it may still be possible to reduce your tax bill for 2018-19. For example, you could make a gift to charity in the current tax year and then elect to carry back the contribution to 2018-19. A request to carry back the donation must be made before or at the same time as the 2018-19 Self-Assessment return is filed. If you would like to discuss any of the issues raised, please call.