End of Tax Year checklist – How to make 2017 count!

As a nation, we’ve had more than 200 years to get used to the end of the tax year falling on 5 April. In spite of this, each year it takes us by surprise and there’s the inevitable mad scramble to gather all the relevant information to submit to HMRC. Leaving it to the last minute, however, means you could be missing out on valuable tax breaks.

The end of the tax year is now fast approaching. In order to minimise your liabilities and make life easier ahead of the end of the 2016/17 tax year, start preparing now ahead of submitting your personal tax return advises Michael Heath, director of Milestone Financial Planning.

Here is Michael’s End of Tax Year Checklist to help you get ready ahead of the 5 April deadline and make the most of any tax breaks.

1. Capital Gains Tax (CGT)– Use the annual exemption for 2016/2017 which allows gains of up to £11,100 without triggering a (CGT) charge.
2. Income Tax – Use the annual ISA limit, which was increased to £15,240 during the 2016/17 tax year.  Investing in Enterprise Investment Scheme (EIS) or Venture Capital Trust (VCT) qualifying shares gives 30% income tax relief on investments up to specified limits.
3. Pension Contributions – Make the maximum pension contribution on offer for higher rate tax relief. You can also carry forward your allowance from previous unused years.
4. Inheritance Tax – There is annual exemption for Inheritance Tax meaning that you can give away cash or assets worth up to a total of £3,000, without triggering Inheritance Tax.
5. Looking Ahead – With a savings rate band at 0% and the ability to move part of the Personal Allowance between spouses, acting now will help ensure that you are as tax efficient as possible.  For example, a reallocation of assets between spouses, a change in investment strategy or a simple review of the expenses claimed against self-employment or rental income may provide tangible tax savings.
6. Speak to an independent financial advisor – Sorting all of this before the end of the tax year can be a headache. Sensible tax planning is an important exercise, and allowances are there to provide savings. We can help. For more information, or to review your tax plans with an independent expert please get in touch.

And, just in case you’re wondering why the end of the tax year falls on the 5 April, blame Pope Gregory XIII who ordered a change of calendar from the Julian (named after Julius Caesar) which had been in use since 42 BC, to the Gregorian calendar in 1582.

However, it took Great Britain a further 200 years to adopt the Gregorian calendar. Until then there was a difference of 10 days between the calendar in Britain and the rest of Europe.

Prior to 1752, the tax year in Great Britain started on 25 March, old New Year’s Day in order to ensure no loss of tax revenue decided that the taxation year which started on 25 March 1752 would be of the usual length (365 days) and therefore it would end on 4 April. The next difficulty was that 1800 was not a leap year in the new Gregorian calendar but would have been in the old Julian system. Therefore, the Treasury moved the tax year start again to the 6 April in 1800 where it has remained ever since.

To speak to an independent, knowledgeable financial adviser, then please get in touch with a member of our friendly expert team here at MilestoneFinancial Planning. To get in touch, please call us on 07967671603.