Tip of The Week – End of Year Tax Planning – Income Tax

It may be too late for this year but look at ways to equalise the taxable income between you and your spouse to make best use of allowances and lower rate bands. Consider redistributing investment capital between you to reduce the rate of tax suffered on income and gains.

Things to consider which might still make a difference in the current year include:

Pay pension contributions by 5 April 2022.

Look at ways to redistribute taxable income to your spouse

If you don’t pay your spouse a wage from your company, make an annual wage payment before 5 April 2022.

Consider using the marriage allowance if one of you has very little income and the other is a basic rate taxpayer.

If you run your own business through a limited company, can you pay a dividend of at least £2000 because it is tax free in your hands?

Utilise the personal savings allowance of £1,000 by paying interest on any balances you have loaned your company.

Make a Gift Aid donation and if you are a higher or additional rate taxpayers you will get a further 21% or 26% of the grossed up donation as a reduction in tax liability.

If you have already made Gift Aid donations, make sure they are recorded on your tax return.



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