3 April 2018
Making your money go further: how to make tax efficiencies for the year ahead
With the 31 January deadline for the 2016/17 tax bill payments now past, thoughts will no doubt be turning to how you can make efficiencies over the next 12 months in order to make your money go further. We shared a few suggestions previously on how you can do this, but there are other tax planning initiatives that could lead to savings or even a tax refund.
Invest in EIS or Seed EIS qualifying companies
Before 6 April 2018, individuals may invest in companies that qualify under the Enterprise Investment Scheme (EIS) and treat that investment as having been made in 2016/17. The tax relief is 30% of the amount invested. So, a £20,000 investment can reduce the 2016/17 tax liability by £6,000.
Investing in a Seed EIS qualifying company is even better as there is a 50% tax relief. Such companies tend to be riskier than EIS qualifying companies. You should therefore obtain specialist advice from an independent financial adviser (IFA) if you are considering such investments.
Investing in an EIS qualifying company can also enable you to defer capital gains tax (the investment could also be within 12 months prior to the disposal). To do so you must reinvest the amount of the gain within the 3 years following the date of the disposal giving rise to the gain.
Increase your pension savings before 6 April 2018 to reduce payments on account
Investing more in your pension no longer reduces your 2016/17 tax liability, however if you invest before 6 April 2018 that payment can be taken into consideration in computing your 2017/18 liability and hence you might be able to claim to reduce your payments on account, if you make them.
The maximum pension contribution is generally £40,000 each tax year, although this depends on your earnings. It is also possible to add to this any unused relief brought forward from the previous three tax years.
What better way to start the new tax year than by planning ways to potentially get a refund?
The above are just two ways you can potentially get some cash back. Our highly experienced tax team is ready and waiting to have a confidential chat so that you could start making your money go further. Contact our expert tax team on 0115 964 8888 or email firstname.lastname@example.org today.
The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.