text: All our clients will know by now that we like you to be well prepared for your year end. Here are a couple of reasons why we believe it’s so important to plan ahead.
  Topping up your pension
  Pensions are now more flexible than they have ever been and remain extremely tax-efficient. You’ll receive tax relief at the basic rate of 20% on contributions made to personal and workplace pensions. So for every £80 you pay in, HMRC will top it up to £100. If you’re a higher or additional rate taxpayer, you can claim back up to an additional 20% or 25% through your self-assessment tax return.
  By looking at your company profit before the tax year end, you can see immediately whether a lump sum payment into your pension will save you tax. All employer contributions to a company pension scheme attract 100% tax relief for corporation tax.
  However you’ll need to watch out for the annual pension allowance. This is the limit on the amount that can be contributed to your pension each year while still getting tax relief. For the 2019/20 tax year, for most people it’s £40,000, or the value of your whole earnings – whichever is lower. Lower allowances may apply if you have already started drawing a pension, or if you are a higher earner with income plus pension contributions that total above £150,000. If you’ve used your full allowance in the current tax year but not in recent years, you may also (depending on your circumstances) be able to ‘carry forward’ any annual allowance that you haven’t taken advantage of in the three previous tax years.
  Getting Personal with your allowances
  Everyone has a certain amount of income they can earn each year without paying Income Tax, known as their ‘personal allowance’. For the 2019/20 tax year, this amount is £12,500.
  Your personal allowance is in addition to the Personal Savings Allowance (PSA). Since April 2016, savings interest has been paid tax-free, which means that most savers no longer have to pay Income Tax on the savings income they receive. Your PSA depends on which Income Tax band you are in, with basic rate taxpayers entitled to a £1,000 allowance, while higher rate taxpayers receive a £500 allowance. Additional rate taxpayers are not eligible for a PSA.
  Investors also have a dividend allowance, which means that individuals receive their first £2,000 in dividends tax-free, but any dividends above this amount will be charged at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers. If you have not used all of your lower rate tax band and would like advice on whether you should be taking more dividend before 5 April 2020 please contact us.
  Take advantage of your marriage vows. If one spouse is a higher rate or additional rate taxpayer and the other doesn’t pay tax at all, it could be more tax-efficient to put the account solely in the non-taxpayer’s name. This would give that spouse full ownership of the account, so you’ll need to make sure you’re both happy with the arrangement.
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  Wild and Co Charted Accountants
  Windsor House
  Cornwall Road
  Harrogate
  HG1 2PW
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