The end of the tax year is just around the corner. So, there’s no better time to make sure you’re prepared and all your ducks are in a row.
To help you stay on top of things and remain organised, I’m going to reveal some super tax tips. Read on to find out how you can stay ahead of the game and make the most of all your options.
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When is the end of the tax year?
The 2021/2022 tax year will be drawing to a close on 6 April, which is less than a month away! It’s always best to be in a good position well in advance. That way you won’t end up rushing around like mad at the eleventh hour.
What should you check before the end of the tax year?
With the help of an expert, I’m going to share a brilliant checklist you should run through before 6 April. Emma Keywood, senior product manager for Dodl (the investing app from AJ Bell), gives her five top tax tips.
1. Make the most of free government money
Who doesn’t love free money? There are loads of different ways you can access free government cash.
These benefits run during the tax year, so it’s important to make the most of them before the deadline. You can get hold extra cash perks by maximising the tax relief for your pension or SIPP (self-invested personal pension).
Or, if you’re a savvy saver with a lifetime (ISA), you may want to try and max out your contributions to qualify for the free £1,000 up for grabs each year.
2. Shelter more of your investments from tax
No matter what kind of investing strategy you use, it’s always worth protecting your gains from tax. The best way to do this is by using a stocks and shares ISA.
You can put in up to £20,000 before the end of the tax year. What’s even better is that if you’ve got investments outside an ISA, you can use something called ‘Bed and ISA’ to move them into your tax wrapper. Your brokerage account might help with this process. However, it’s important to note that you may be liable to Capital Gains Tax (CGT).
If you don’t have an ISA, take a look at our list of top-rated stocks and shares ISA platforms.
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3. Use your Capital Gains allowance to cut your future tax bill
Although investments outside an ISA can be subject to CGT, right now you have a tax-free allowance of £12,300 to use before April 6.
This allowance can’t be carried over into next year. So, it’s a use it or lose it situation. If you’ve made gains with investments outside your ISA or pension, it might be worth taking some profit and making the most of your tax-free allowance.
4. Set up regular investing to take the hassle out of saving
In order to keep your finances organised, it’s a good idea to set up a regular payment into your savings or share dealing account.
This way, you can easily track what’s going where, allowing you to plan and take control ready for the incoming new tax year.
5. Tackle the inflation bogeyman
You’re probably sick of hearing about inflation these days. Every time it’s mentioned, it’s a constant reminder that your cash is losing value and the things you buy are getting more expensive!
With high inflation and low interest rates, making the most of a Cash ISA for short-term savings can be a wise move.
And, for any funds you’re able to lock away for a while, you should consider putting that money to work using a stocks and shares ISA, especially if you’ve not used up this year’s allowance.
Please note that tax treatment depends on the individual circumstances of each individual and may be subject to future change. The content of this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
The post Don’t slip up! 5 ways to breeze through the end of the tax year appeared first on The Motley Fool UK.
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