The current tax year will end on 5th April 2021, therefore now is the time to look at opportunities to reduce your personal tax liability for the current year. There were no announcements in this month’s budget (March 2021) that will take effect within the current tax year.
Now is the time to think about:
- Working at home allowance – where you are required to work at home your employer can pay you £6 per week tax-free. If your employer doesn’t pay this allowance, but you are required to work from home for at least some of your working time, you can claim the same amounts as tax deductions from HMRC.
- Individuals who reach state pension age after 6 April 2016 need to have accrued 35 complete years of National Insurance Contributions to receive the full state pension. To receive ANY state pension you need at least 10 complete NIC years. It is possible to plug gaps in your NIC record.
- If you think the value of your estate may exceed the current Nil Rate Band of £325,000, we recommend an Inheritance Tax Review to ascertain what liability your estate may have and what can be done now to mitigate this. It may be possible to remove or significantly reduce potential IHT with early planning.
- Pension payments – are you a higher rate taxpayer? Making contributions extends the basic rate tax band, which extends the point at which you pay tax at 40%. If you have not maximised your contributions over the current and/or past 3 tax years there is an opportunity to utilise any unused allowances in the current tax year.
- Do you have a company car and are you aware of how much tax you are paying on this? There is minimal tax on electric company cars and enhanced allowances for your employer.
- Do you own residential property? A range of new rules affecting income tax relief, capital gains tax and stamp duty land tax mean a review of your current property portfolio is recommended. It may be better to incorporate to mitigate tax liabilities.