An Introduction to End of Year Tax Planning
As the end of the tax year approaches, now is the perfect time to ensure you have your financial affairs in order and to double check you’ve taken advantage of all the tax-efficient allowances available to you.
THE PENSION
You can contribute as much as you like into your pension, but there is a limit on the amount of tax relief you will receive each year.
This Annual Allowance is currently £40,000. An individual can’t use the full £40,000 Annual Allowance where ‘relevant UK earnings’ are less than £40,000, although your employer still could. You may be able to, however, carry forward unused allowances from the past three years, provided you were a pension scheme member during those years.
For every £2 of adjusted income (total taxable income including all pension contributions) over £240,000, an individual’s Annual Allowance is reduced by £1 (the minimum Annual Allowance is £4,000).
To read more about this topic, please view the guide below.