The way we see it

End of Tax Year planning for 2019 – your checklist

Pension savings: maximise tax relief

If you are a higher or additional rate tax payer, you may wish to contribute an amount to maximise that relief at 40% or 45% while you have the opportunity. If you have sufficient earnings you can make use of carry forward to make contributions in excess of the current annual allowance. This is in fact the last chance to benefit from the potential double annual allowance for 2015/16 before it drops away – so it’s a case of ‘use it or lose it’ before the tax year end.

It is worth remembering that you can pay pension contriubtions for your partner, and not just by an amount of £3,600, but up to their earnings, and, it will be your partner who receives the tax relief.

Approaching retirement? Now is the time to boost pension savings 

If you are considering retiring and taking advantage of the income flexibility for the first time, it is worth making a contribution to your pension before April. This will allow you to take full advantage fo the £40,000 Annual Allowance for this year, plus any unused allowance carried forward from the last three years.

By taking an ‘income’ payment from your pension, you will trigger the Money Purchase Annual Allowance, this means if you wish to continue funding your pension the amount you can contribute is restricted to £4,000, with no ability to carry forward any unused relief from previous years.

There are other ways of meeting income requirement needs in retirement that do not restrict future pension saving – call us to discuss.

Business owners: take profits as pension contributions

As a director, taking significant profits as pension contributions could be the most efficient way of paying yourself and reducing your overall tax bill and paying yourself. There is no NI to pay on either dividend or pension contributions, Dividends are paid to you from profits after corporation tax and will also be taxable in your hands. By making an employer pension contribution, tax and NI savings can boost your pension fund.

Employer contributions made in the current financial year will receive tax relief at 19%, however, this will reduce to 17% in 2020. So, it may be worth funding a pension contribution sooner rather than later, if you have the profits and the cash available.

Use ISA allowances

ISAs offer a valuable shelter from income tax and capital gains tax, if you hold all of your savings in this type of investment, it is possible to avoid completing a self assessment return.

The ISA allowance is given on a use it or lose it basis, the period leading to the tax year end, is often referred to as ‘ISA season’, it is the last chance to use the allowance available. Savings delayed until after 6 April 2019 will count against next years allowance.

Investments: take profits using the Capital Gains allowances

If you are looking to supplement your income in a tax efficient way, consider withdrawing funds from an investment portfolio but make sure you keep the gains within the annual exemption.

Even if cash isn’t needed, taking profits within the £11,700 Capital Gains Tax allowance and re-investing the proceeds will mean there will be less tax to pay when you ultimately need to access these funds to meet spending plans.


Effective tax planning is a year round job. However, it is at the end of the tax year that we have all the pieces to complete the planning jigsaw. Contact us to discuss how we can help.


A seasonal bonus for pensions

End of year bonus payments

The tax year end can focus the mind, in particular with regards to pension funding – if allowances are not used before the end of the tax year, they may be lost. But where can you find the ‘cash’ to top-up your pension? One solution could be to use any end of year bonus payments you have received.

March is traditionally bonus season for many companies and it is this that can be used to make the most of any unused pension allowances. Also, if your employer allows the option of making a pension contribution using bonus sacrifice, the boost to your pension could be worth nearly double the net amount you would get if it was taken as cash.

A large bonus can in many cases push income over certain tax thresholds, meaning that key allowances and benefits could be lost. A contribution to a pension can solve these issues, while at the same time building up a retirement fund for when it is needed.

Avoiding the child benefit tax charge

Child benefit can be taken for granted, but it can also be taken away. Where someone in your household earns more than £50,000, the benefit begins to be withdrawn by way of a tax charge, with child benefit being cancelled out completely for those earning in excess of £60,000. This could mean losing up to £2,501 for a family with three children.

A bonus paid late in the tax year could amount to total income exceeding the £50,000 threshold. The solution could be to make a pension contribution as this reduces the income amount used to determine eligibility.

Retaining personal allowances

Once again a larger than expected bonus could mean your personal allowance is eliminated. The allowance is eroded once income is greater than £100,000, until there is no personal allowance at all for anyone with an income over £123,700. A pension contribution can help to bring income down below the £100,000 threshold and allow their personal income tax allowance to be retained.




The importance of Lasting Powers of Attorney

LPA background:

There are two types of LPA. Firstly, there is a ‘property and financial affairs’ LPA, which gives the attorney(s) the power to make decisions in relation to the donors finances etc. This LPA can take effect as soon as it has been completed and registered, or it can be used at a later date. The second type of LPA is ‘health and welfare’, this gives the attorney(s) powers to make decisions relating to the donors medical and care decisions. This type of LPA can only be used once it has been registered and the donor has lost mental capacity and as such is unable to make decisions.

What are the benefits to me of setting up an LPA? What will happen if I don’t?

If, at some point in the future, you were to lose mental capacity, you would no longer be able to make and act on a particular decision, such as, altering the required income from your pension account. If you have in place an LPA, the attorney(s) chosen by you, can make those decisions on your behalf and have a duty of care to act in your best interests. Therefore, the decision to alter your pension income can be taken immediately by your chosen attorney.

If you do not have an LPA in place, the only alternative is an application to the Court of Protection for the appointment of a ‘deputy’. The initial and ongoing costs associated with a deputyship are very high and often amount to thousands of pounds. You also do not have control over who is appointed as your deputy (although it would normally be someone from among friends and family), and the application to the Court can be complex and time-consuming. Typically these applications can take up to a year to complete, during this time you will not be able to access your financial accounts or alter any existing instructions.

Making an LPA gives you control over the question of who is to look after your finances and/or welfare if you become unable to make decisions for yourself. It is significantly more economical in both cost and time, and it will ease the burden on you and your family if you need to be looked after in the future.

Making an LPA

There are a number of elements to consider when making an LPA and we strongly suggest you seek professional advice. We have over the years worked with a number of legal professionals and are very happy to refer you to someone whom we know and trust. Please contact us to discuss.

Pension funding tips

Saving for a comfortable retirement is important for all of us, here are a few tips on how you can get even more value from your pension savings:

The ‘couples’ annual allowance of up to £80,000:

1. Pay contributions into your partners pension up to the limit of their earnings, not just to £3,600 as many people believe. Paying into your partners pension will mean they also receive the tax relief.

Helping children or grandchildren save for the future:

2. Start to build a pension fund for your children or grandchildren. There is no minimum age to start a pension plan, though for children under the age of 18, a parent or legal guardian would need to establish the contract on the child`s behalf. Where minor children are involved, they will benefit from basic rate tax relief on contributions up to £3,600 each tax year while a UK resident. For adult children higher rates of tax relief are available depending on earnings.

Pension contributions can help with more than just retirement benefits:

3. There are times when making a pension contribution can cost less than you may think. A contribution could restore your income tax personal allowance or child benefit.

A large personal contribution can help avoid the tapered annual allowance:

4. The tapered annual allowance can be a problem for high earners. At worse, an allowance of only £10,000 could either restrict how much can be paid into a pension, or potentially create a tax charge. It is possible for you to make a large pension contribution which can alleviate this situation.

For a product with an initial simple purpose – to provide an income in retirement, pensions have many other aspects that can touch on different areas of your financial life.

Speak to us to see how we can help you.

Summary of the 2018 Budget

Here are the key points from yesterday’s Budget and from measures already announced:

Income Tax:

  • The personal allowance and higher rate threshold will increase earlier than expected to £12,500 and £50,000 respectively from April 2019. These thresholds will remain at the same levels in 2020-2021 and then increase by CPI. The income tax thresholds for Scottish taxpayers will be announced in the Scottish Budget on 12 December.


  • The pension lifetime allowance (LTA) will rise to £1,055,000 from April 2019.
  • There are no changes to the pension annual allowance (AA). The standard AA remains at £40,000, money purchase AA stays at £4,000 (with no carry forward) and there are no changes to the higher income AA taper rules.

Capital Gains Tax:

  • The capital gains allowance will increase by £300 to £12,000 from April 2019.
  • To better target private residence relief at owner occupiers. From April 2020 the government will reform lettings relief so it only applies where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 to 9 months.

Inheritance Tax:

  • As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.
  • The residence nil rate band will increase from £125,000 to £150,000 from April 2019, allowing some couples to leave up to £950,000 to future generations IHT free.


  • The annual ISA limits will stay at £20,000 per person, with no reduction in the range of ISA options available to meet different needs.
  • The annual subscription for Junior ISAs and Child Trust Funds for 2019-20 will be increased in line with CPI to £4,368

Entrepreneurs Relief:

  • To support long-term business  investments from 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 to 24 months. In addition to the current requirements to share capital and voting rights, from 29 October 2018 shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company to claim relief.

Digital Services Tax:

  • From April 2020 the government will introduce a new 2% tax on the revenue of certain digital businesses to ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users.

Stamp Duty Land Tax (SDLT) and first time buyers relief:

  • First time buyers relief in England and Northern Ireland will be extended so that all qualifying shared ownership property purchases can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. The change will apply to relevant transactions on or after 29 October 2018 and will be backdated to 22 November 2017, so those who have not claimed the relief can do so.