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Pre 5th April 2015 Checklist

Check list with red mark

Pre 5th April 2015 Checklist

Pay a Pension Contribution 

Did you know – You can receive 20% tax relief on a pension contribution even if you don’t pay tax! The maximum a non tax payer can contribute is £3,600 gross – a payment of £2,880 to which the tax man adds £720!

If you do pay tax then you can make a pension contribution up to the maximum of your earnings or £40,000 whichever is lower.

For example: If you earn £35,000 you should be able to contribute £35,000 gross to your pension. The payment you make will be £28,000 to which the tax man will automatically add (20%) basic-rate tax relief of £7,000.

Higher and top-rate taxpayers can claim back even more through their tax return.  Also sometimes more than £40,000 of pension contributions can be paid, this is subject to the 3 year rule which looks at earnings and contributions in previous years.

Make a 2014/2015 Contribution to an ISA

The ISA allowance for 2014/15 tax year is £15,000.  You have the option to split this allowance anyway you choose between a cash ISA and an Investment ISA to suit your changing needs, including the full amount into a cash ISA.

Make a gift up to £3,000

Gifts totaling up to £3,000 (plus any unused balance of £3,000 from the previous tax year) may be gifted in a tax year with no danger of future tax implications.

It is not so widely known that regular gifts from income are also exempt from IHT. So you could make the equivalent of several gifts of £3,000 a year by paying £250 a month to your children (or anyone else), if you could afford to be so generous without depleting your savings.

You should be aware that such gifts are closely scrutinised on death by HM Revenue & Customs.

Declare a Dividend from your Company

Consider the maximum amount you can pay yourself in dividends without having to pay higher rates of tax.

The higher rate tax threshold for the tax year ended 5 April 2015 is £41,865 being the personal allowance of £10,000 plus the basic rate band of £31,865.  Making a private pension payment will increase the basic rate band.

When calculating the dividend payable the notional tax credit on dividends has to be taken into account.  For Example if you have a salary of £15,365 and no other income, you will have £26,500 of basic rate band available. To fully utilise this amount the tax credit would be £26,500 @ 10% equals £2,650 of tax credit and the dividend payable would be £26,500 @ 90% being £23,850.

Your company needs to have made sufficient profits after corporation tax to declare these dividends.

Make a Capital Gain to Utilise your annual exemption

If you hold shareholdings with significant capital gains then you can utilise the annual capital gains tax exempt amount, which for the 2014/15 tax year is £11,000 per person, by selling shares to realise a profit equivalent to the annual exemption.

Gains over this exemption are tax at 18% for basic rate taxpayers and 28% for higher rate taxpayers.  The gain is added to income to calculate the correct rate of tax.

Please note that if shares are sold and then re-purchased within 30 days then that re-purchase price would be used to calculate the capital gain, instead of the original cost.

To find out more about what you should turn your attention to pre-April why not get in contact for a no obligation chat to see if we can save you some time and money in 2015.

Rosie Valentine

Rosie Johnson

Written by Rosie Johnson of Spurling Cannon

If you would like to contact Rosie about this blog post or any other accounts related matter, please e-mail her on rosie.johnson@spurlingcannon.co.uk or phone the office on 01843 848383

 

 

 

Spurling Cannon Limited have made every effort to ensure accuracy at the time of publication. Information may be subject to legislative changes. Recipients should note that information may not reflect individual circumstances and should, therefore, not act on any information without seeking professional advice. We cannot accept any liability for actions taken or not taken as a result of the information given in this publication.

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