We are approaching the end of the tax year so now is the time to start considering what you need to do. There are many options and of course these depend on your circumstances but below we have highlighted just a few of the key things you may want to consider before the 5th April 2015.
Use your ISA allowance
Every person has an allowance every tax year. The current allowance is £15,000. Income and capital gains from ISAs are tax free and withdrawals from adult ISAs do not affect tax relief. Why wait until March? For the Tax year 2015/16 the allowance is £15,240.
Use your Pension allowance
Every person has an allowance of £40,000 per annum, which is the amount that can be contributed into your pension scheme by yourself and your employer.
Maximising contributions in 2014/15 may be advantageous – depending on your past contribution pattern and the ability to adjust your payment input period, it is theoretically possible to contribute up to £190,000 before 6 April 2015 and obtain tax relief on the whole sum.
Invest in Enterprise Investment Schemes (EIS)
Investments in qualifying EIS companies in 2014/15 attract income tax relief at 30% on a maximum annual investment of up to £1 million for qualifying individuals – spouses and civil partners each have individual investment entitlements. Relief from CGT is available too, but EIS investments remain higher risk than many other choices.
Invest in Venture Capital Trusts (VCTs)
Buying units in venture capital trusts (VCT) is also higher risk than many other investment choices as they are required to invest in smaller companies that are not fully listed, however, they also offer generous tax benefits.
Income tax relief at 30% is available on qualifying investments of up to £200,000 for 2014/5 and dividends received from the units are tax free. In addition there is no CGT payable on any gain made when you sell the VCT.
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