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Year end tax planning – CGT, Pension Planning and ISA’s

Date posted: 3rd Mar 2020

Year-end capital gains tax planning

Have you used your 2019/20 £12,000 annual capital gains exemption? Consider selling shares where the gain is less than £12,000 before 6 April 2020.

Also, if you have any worthless shares consider a negligible value claim to establish a capital loss. You may even be able to set off that capital loss against your income under certain circumstances which could save tax of up to 45% of the loss.

Pension planning before the end of the tax year

For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and their employer.

Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current year, but then lapses if unused. Hence the unused pension allowance for 2016/17 will lapse on 5 April 2020. Note that under the current rules the net after tax cost of saving £10,000 in a personal pension for a higher rate taxpayer is only £6,000.

Have you used your 2019/20 ISA allowance?

Your maximum annual investment in ISAs for 2019/20 is £20,000.  Your investment needs to be made before 6 April 2020.  In addition, have you thought about investing for your children or grandchildren by setting up a Junior ISA? In the 2019/20 tax year, you can invest £4,368 into a Junior ISA for any child under 18.

If any of the updates in this article raise any issues for you or your business, please contact our Tax team here or call us on 01325 349700.

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