The tax year end, 5th April 2019, is only a few weeks away now. However, there is still time to make some tax savings if you act quickly. The following is a list of items you need to consider now.

Married Couple’s Allowance
As covered in detail in the last issue, where one spouse has income below the personal allowance, it is possible to transfer a portion of the unused personal allowance to the other spouse. As also noted in that article, you can also backdate the claim to prior years. The limit for this backdated claim is 4 years. As the allowance was introduced in the year ended 5th April 2015, this means that the claim for that first year will be lost if it is not made before the end of the current tax year.

Assets on divorce
Transfers between spouses are not subject to Capital Gains Tax. This is because they are treated as being for the exact amount the asset originally cost, creating a situation where there is no gain or loss. This is an exception to the normal rule that transfers between related parties are treated as taking place at market value regardless of the actual price paid. As many assets will increase in value over time, even if only from inflation, this latter treatment often creates an unexpected tax bill. 

If you are in the unfortunate position of going through a divorce, then there may well be significant transfers of assets as part of the settlement. Provided these are made before the end of the tax year where separation took place, such transfers still qualify for the no gain/no loss spousal treatment. This can potentially avoid a large tax bill at an already difficult time.

National Insurance Top-up
An individual’s entitlement to the State Pension is dependent on their having sufficient qualifying years of National Insurance credits. These can be obtained through various means, including employment, self-employment and Child Benefit claims. You need a total of 35 years of credits to receive the full State Pension. It is possible to make a payment, known as a top up, to fill in missing years. Such top ups can be made to cover the last 6 years. After 5th April 2020 it will no longer be possible to top up the year ended 5th April 2013, so any top ups for that year need to be made now.

ISA Allowance
ISAs are tax-free savings arrangements. There are four main types of ISA
• Cash ISA
• Stocks and Shares ISA
• Innovative ISA
• Lifetime ISA

The majority of people will only make use of the first two. 

There is a limit to the total amount you can put into an ISA in each tax year. For the current year this is £20,000. This allowance resets each year, with any unused allowance from earlier years being lost. If you have funds available for ISA investments, these need to be made before the tax year end. 

However, for Cash ISAs, it is worth considering the amount of interest you will be receiving. The introduction of the Personal Savings Allowance means the first £500 of interest an individual receives is tax-free in any case. Depending on the amount you have to deposit, an ordinary savings account with a higher interest rate may be better than an ISA.

Business assets
When you buy assets to use in a business, you can claim their cost to reduce your taxable profits. This claim is known as ‘capital allowances’. Whilst some purchases are restricted, most will qualify for the Annual Investment Allowance, which currently allows for deduction in full of the first £200,000 of asset purchases. If you have not already used this allowance, it is worth making sure any pending asset purchases are made before the tax year end. 

The new tax year promises to bring challenges of its own, not least the first application of HMRC’s controversial Making Tax Digital scheme. Keep reading these pages for further tips when that new tax year rolls around. 

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