2019/20 Tax Planning
As we approach the end of the 2019/20 tax year, it is time to consider whether you have made the most of the thresholds and allowances available to you before 5th April. We are on hand to help you take advantage of these allowances, arrange a call with us to discuss in further detail and make the necessary arrangements with you.
Tax Free Allowance
For most taxpayers, the tax-free income allowance for 2019/20 is £12,500. You will want to ensure you have made use of this before 5th April as unused allowances cannot be carried forward.
For shareholders, the tax-free dividend allowance is £2,000, which again is non-transferable to the next year.
Basic Rate Tax
The 2019/20 higher rate tax threshold is £50,000 – income to this level is taxable at 20% and dividend income taxable at 7.5%.
Directors and shareholders will want to consider maximising their dividend income (where available) to use as much of the basic rate of 7.5% as possible.
Those who are set to exceed the higher rate band will want to consider how Gift Aid donations or pension contributions can be claimed to extend your basic rate band and reduce your tax liability.
Marriage Allowance
This allows spouses, where one person earns under £12,500, to transfer up to £1,250 of their personal allowance from the lower earner to the higher earner, saving up to £250 in tax.
High Income Child Benefit Charge
If the highest earner in the household’s income has exceeded £50,000, there will be a charge to repay some, or all of, the Child Benefit received.
Be prepared for this additional liability to be payable with your 2019/20 tax return, you must pay back 1% for every £100 earned over £50,000.
Check your Tax Code
It is worth checking that the correct tax code has been applied to your 2019/20 income. You can find more guidance about Tax Codes here or please contact us with any questions if you’re unsure.
Capital Gains
Individuals have a £12,000 tax free allowance on gains made in 2019/20 so you may want to consider disposing of shares or assets with gains up to this value to make use of the full allowance.
ISA Allowance
The 2019/20 allowance is £20,000 where taxpayers can save in an ISA account with tax-free returns. Unused allowances cannot be carried forward so now is the time to move your money.
Pension Contributions
The pension annual allowance is £40,000 – this allowance can be carried forward for up to three tax years meaning unused allowances in your 2019/20 return can be claimed to a maximum of £160,000.
This can be particularly useful if company owners have substantial unused company reserves.
Get in Touch
Equal Accountancy are committed to helping you maximise your allowances and minimising your tax liabilities. Book a call with us to go through your tax saving opportunities today. Keep your eyes peeled for our guide to the new thresholds and allowances effective from 6th April 2020.
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Equal Accountancy Ltd offers Accountancy and Bookkeeping services in Hemel Hempstead and surrounding areas across Herts, Beds and Bucks. We offer a range of services for Limited Companies, Self-Employed individuals and Landlords including Year End Accounts, Corporation Tax returns, Self-Assessment Tax returns, Payroll services, VAT returns, Bookkeeping and Company Secretarial. Get in touch today for a free, non-obligatory quote for your business needs.