Tax tips for the new year

  1. Use the capital gains annual exemption of £11,700 for 2018/19.  It can’t be carried forward or transferred to another person
  2. Use your ISA allowance of £20,000 for 2018/19.  The Junior ISA allowance has increased slightly to £4,260 (for children under 18). ISA allowances cannot be carried forward.
  3. Maximise the pension annual allowance of £40,000 (but tapered down for someone earning over £150,000 to a minimum of £10,000).  You can carry forward unused pension annual allowances for up to three years, so the 2015/16 allowance needs to be used by 5 April 2019.
  4. Use the inheritance tax gift exemption of £3,000, which can be carried forward one year.  So if you didn’t use it in 2017/18 you have £6,000 available in the current year.
  5. Consider transferring income producing assets to the lower earning spouse to take advantage of their personal allowance and lower tax bands.
  6.           If you make an investment in a venture capital trust (VCT) or the enterprise investment scheme (EIS), consider completing these early so that any tax repayment can be potentially be made sooner, or enabling the relief to be carried back to the previous tax year.
  7.           File your 2017/18 self-assessment tax return – if you think you are due a tax repayment, file your tax return as soon as possible so that you receive the refund.  If you had to make advance payments on account for 2017/18, it makes sense to file your tax return before 31 July 2018, so that the second payment on account could be potentially reduced.  Finally, filing your tax return early starts to limit the time window that HMRC have to raise an enquiry into your return – HMRC have one year from the filing date of your tax return to issue their enquiry.
  8.         Make any charitable donations before filing your 2017/18 tax return and you can decide whether you want to carry back the donation to 2017/18 to achieve the tax relief earlier.
Colm McCoy – Senior Tax Manager

Colm leads Nicholsons’ dedicated tax department and joined the firm in August 2014. Colm started his tax career in 1984, passed the chartered tax exams in 1989 and has now amassed over 30 years of experience. At Nicholsons, Colm advises SMEs and owner-managed businesses on their personal and business tax affairs.

When he’s not at work, Colm trains fanatically to compete in the obscure but growing sport of Crossfit. In his more sedentary moments he dabbles in problems in physics while listening to German opera or heavy metal.