Things to consider before the new tax year starts

28 March 2018


The end of the 2017/18 tax year is fast approaching. Here are four things to consider before the new tax year starts on 6th April 2018 to make the most out of your finances.

1. Make use of your ISA allowance

You can invest a maximum of £20,000 into an ISA, including a stocks and shares ISA or cash ISA and pay no UK Income Tax or Capital Gains Tax on your ISA returns. You can choose to split the allowance between a cash and stocks and shares ISA or contribute to just one. You can’t have two of the same type of ISA in one tax year. Please note you cannot carry forward any unused ISA allowance into the next tax year so if you don’t use your allowance before 6th April it is lost.

2. Consider topping up your pension

Ordinarily, you are eligible for tax relief on your pension contributions up to the Annual Allowance of £40,000 for the 2017/18 tax year. However, those with high levels of income may be restricted in the contributions they can make. You can also carry forward unused allowances from the previous three tax years. You need to have sufficient earnings to support making a pension contribution. If you don’t have any earnings you can contribute a maximum of £3,600 gross.

3. Annual inheritance tax gift allowance

You can gift up to £3,000 each year without inheritance tax (IHT) implications using your annual exemption. If you did not use your exemption last year, you can gift up to £6,000.Couples may be able to gift up to £12,000 in this way. You can also make any number of smaller gifts up to the value of £250 to other individuals. Please note you cannot give a small gift of up to £250 to the same individual whom you gifted your annual exemption of £3,000. To find out about more about further annual gift allowances and how to manage your inheritance tax liability, contact your Brown Shipley Wealth Planner or usual Brown Shipley adviser.

4. Utilise your dividend allowance before it is cut

The Dividend Allowance means that the first £5,000 of dividend income you receive in the 2017/18 tax year is tax free; this is in addition to the personal allowance for income (£11,500 in 2017/18). Dividends over the Allowance are taxed at 7.5% for basic-rate taxpayers and 32.5% for higher-rate taxpayers, or 38.1% for additional-rate taxpayers. The Dividend Allowance will reduce from £5,000 to £2,000 from 6th April 2018.

This article is for information purposes only and must not be communicated to any other person. It does not constitute investment advice and is not a recommendation for investment. Past performance is not a reliable indicator of future results. The value of investments and any income from them may fluctuate and is not guaranteed. Investors may not get back the amount originally invested. References to taxation referred in this article are those available under current legislation, which may change, and their availability and value depend on individual circumstances.

Except insofar as liability under any statute cannot be excluded, neither Brown Shipley nor any employee or associate of them accepts any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in this document or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this document. © Brown Shipley March 2018 reproduction strictly prohibited.

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