Seven things to do before the end of the tax year

The end of the tax year is less than a month away so
there’s not long left to get our finances in order.
AXA Wealth has picked out seven things we should all
be doing to make the most of our money before the
6th April deadline.
1. Maximise your ISA savings
Each year we all enjoy an Individual
Savings Account
(ISA) allowance, which we can save or invest and
enjoy the returns tax free. For 2014/15 you’re allowed
to put up to £15,000 in cash, stocks and shares or a
combination of both. But if you don’t use your
allowance by midnight on 5th April you’ll lose it.
[Six ways to get the most from your ISA]
2. Boost your pension
The annual pension allowance is the maximum you
can contribute to any of your personal pensions in
one year without attracting any tax. For 2014/15 the
annual allowance is £40,000 but you can use the
allowance from the previous three years. Pension
contributions get income tax relief at your marginal
rate so it’s worth making contributions if you can.
3. Check out your personal allowance
The personal income tax allowance (the amount of
income we get tax-free) is £10,000 for most this year
unless you were born before 6th April 1948 or earn
over £100,000. The allowance for those that have an
adjusted net income of £100,000 or more reduces by
£1 for every £2 over the threshold. Those born before
6th April 1948 have a higher personal allowance of
£10,500 depending on their income.
If you're entitled to age-related tax allowances you'll
need to fill in the P161 form. Any part of the personal
allowance not used by 5th April 2015 will be lost so
you should ensure you’re getting the maximum
benefit.
[What your tax statement does, and doesn't, tell you]
4. Give away money
Inheritance Tax (IHT) is due if a person’s estate is
worth more than £325,000 when they die. Currently
IHT is charged at 40% on anything above this
threshold.
But you’re allowed to gift £3,000 a year without
attracting any IHT while you are still alive. Previous
years’ allowances can be rolled over up to a
maximum of £6,000 per person. So that means for
married couples and civil partners who have made
no previous gifts, £12,000 could be given away this
tax year completely free of IHT.
5. Shield your profit
Capital Gains Tax (CGT) is a levy on the profits made
when you sell or ‘dispose of’ an asset that’s increased
in value. It’s charged at 18% for basic rate taxpayers
or 28% for higher rate taxpayers.
You can avoid CGT on certain assets as well as on
gains that are under your annual tax-free allowance.
The annual CGT exemption for individuals in 2014/15
is £11,000 or £5,450 for trusts, but like ISAs if you
don’t use it you’ll lose it!
6. Save for your kids
A Junior ISA (JISA) is a tax-free savings vehicle for
children under 18. The 2014/15 JISA limit is £4,000
and, like a regular adult ISA, it can be saved as cash,
stocks and shares or both. A JISA can be set up for a
child by someone who has parental responsibility but
friends and relatives can contribute to it, which might
make it easier to make the most of the allowance.
It’s worth bearing in mind that 16 and 17 years olds
qualify for both a JISA and adult ISA allowance, which
means for 2014/15 a maximum of £19,000 can be
invested.
7. Invest in small companies
Venture Capital Trusts (VCTs) allow people to invest
in small expanding companies. They’re attractive as
dividends are paid tax-free, there’s no CGT to pay
when you sell and each year investors can put up to
£200,000 into new subscriptions and benefit from
30% income tax relief. The VCT must be held for five
years to qualify for relief though. This type of
investment tends to be high risk so they won’t be for
everyone, but if you’re a seasoned investor ready for
a long-term commitment it might be for you.