There’s still time to act
As the end of the tax year nears, remember that 5 April is a multi-faceted deadline, says Tricia Halliday
The tax year ends on Wednesday 5 April 2017, over a week before Easter. At the time of writing, the Spring Budget had not yet taken place, but any announcements made by the chancellor should not affect most tax year end actions this year.
For more information on the Budget statement and the impacts on you, please visit our website (www.maco.co.uk), I will publish any further updates on these pages in the event that there are unexpected announcements in the Spring Budget that could impact in this tax year.
In theory, this was the last Budget that will take place in Spring, as in November last year Mr Hammond announced he would be reverting to Autumn Budgets; last seen when Ken Clarke was chancellor. That means we will have two budgets this year, but no Autumn Statement and 2018 will witness the first Spring Statement.
The tax year dates will not be changing, so the 2016-17 tax year will end on 5 April – exactly four weeks after the Spring Budget. Therefore, your tax year end planning needs to start as soon as possible. On this occasion, there are a few areas that warrant prompt action:
The end of the tax year is the last chance to carry forward unused annual allowance of up to £50,000 from 2013/2014. The calculations for maximising contributions and picking up unused allowances can be complex and have become more so with the introduction of a tapered annual allowance this year.
If your pension benefits were worth over £1.25m in total on 5 April 2014, you have until 5 April 2017 to claim individual protection. It is also the final day to make ISA contributions of up to £15,240 for the current tax year.
If you reached state pension age before 6 April 2016, 5 April is the deadline for making Class 3A voluntary contributions to top up your state pension.
Your annual capital gains tax exemption of £11,100 will disappear on 5 April (if unused). If your employer offers salary sacrifice arrangements, the new, harsher, tax rules will apply immediately for any starting after 5 April. Arrangements which begin before 6 April 2017 will enjoy the old tax rules for another year (another four years for sacrifice involving cars, accommodation and school fees).
Any of the £3,000 annual exemption for inheritance tax that was unused in 2015/16 will be lost unless you make gifts covering both this tax year’s exemption in full and the unused balance from the previous year.
If you have started to draw a flexible income from your pension arrangements, the maximum further tax-efficient pension contribution you can make will fall from £10,000 to £4,000 on 6 April.
Venture Capital Trusts
The changes introduced to venture capital trusts (VCTs) last year have slowed down the investment process according to many VCT managers. As a result, some managers have decided not to raise any fresh funds this year, while others are making limited new share issues, primarily to existing investors.
The potential reduction in supply comes at a time when the 30 per cent income tax relief offered by VCTs is attracting increased interest from those affected by the latest reductions in the pension annual and lifetime allowances. Good offers could sell out quickly, so do let us know if you wish to invest in VCTs this year and be prepared to act promptly.
If any of these, strike a chord, please get in touch with me, don’t wait for the deadline to pass.
About the author
Tricia Halliday is tax director at Martin Aitken and Co. To contact Tricia, email firstname.lastname@example.org