Year End Tax Saving Tips

Although the budget is upon us and we’re just 3 weeks away from the end of the tax year, there are still a number of opportunities available to save tax in the current year. Here we explain just a few but there are many more we simply don’t have space to explain in detail here. Contact an member of our tax team for more opportunities:

Deferring income

If you normally receive bonuses this month or a dividend from your company you should estimate your earnings for the next tax year, 2013-14, and if next year’s earnings are likely to be lower than the current year’s earnings consider deferring the voting of a dividend or bonus until after 5 April 2013. In this way you can defer any liability on dividends and possibly reduce your overall tax bill. If you are currently paying tax at the 50% rate then deferring income to 2013-14 makes sense as the 50% rate reduces to 45%.


You can save up to £11,280 this year of which up to £5,640 can be in a cash ISA with the balance in shares. If you do not use your annual allowance you cannot carry it forward. Building up a tax free sum can also be very useful as an addition to your pension or for long term investment.

Junior ISA

You can invest up to £3,600 for a child and you can invest in stocks and shares, cash or a combination of both. Junior ISAs can only be set up by parents or guardians and the account is held in the child’s name.
They are available to children who:
– are resident in the UK
– born on or after 3 January 2011
– born before September 2002 and is under 18
– born between these dates and do not already have a Child Trust Fund

The fund is locked away until the child reaches the age of 18.

Capital Gains

Make use of your annual allowance of £10,600 worth of gains to ‘wash-out’ gains on an investment portfolio

Pension Contributions

Have you maximised the amount you can pay into qualifying pension schemes this year? Although basic rate tax relief is generally deducted before you pay your contributions you can claim for the higher rate tax element on your tax return. The annual contribution allowance is £50,000. You can ‘carry forward’ three years worth of unused allowance if you were a member of a pension scheme in the qualifying years.

Higher Rate Tax Relief (Move fast!)

If you pay income tax at 50% you can gain tax relief by contributing to a pension before the rate falls to 45% in April.

Gift Aid Payments

Any Gift Aid payments you make in 2012-13 will effectively increase the amount of income you can earn at basic rate. For a higher rate tax payer (especially those with earnings between £100,000 to £116,210) this can significantly reduce the net cash cost of your donation. This strategy is particularly useful as the deadline for making gift aid payments for 2012-13 is the date you file your 2013 Self Assessment Tax return – this is because such gift aid payments can be ‘carried back’ a year.

Other Investments

Specialist schemes are available that attract tax relief such as VCT, EIS, SEIS.

Two other items you should not put off!

Have you an up to date Will? If not can you be sure how your assets will be distributed following your death? Often it’s not as simple as people may think, let alone the potential Inheritance Tax issues that can be avoided by having an up to date will. Contact us and we can write a tax efficient will for you at very reasonable cost.

If you were to lose mental capacity you need a Lasting Power of Attorney to allow someone you trust to handle your affairs. There are two types, Property and Financial, and Health and Welfare. You can have one or both. Contact us for more detail.

If you wish to discuss any of these issues, please contact your local Burgis & Bullock office on 0845 177 5500 or using our online form.

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