3 ways to save tax prior to 5 April – Part 1

Over the next few weeks, we’ll be sharing 3 really simple ways that you can save tax prior to the end of the personal tax year on 5 April. First up, we take a look at the opportunity that many business owners seem to miss out on each year – ISAs.

Use your ISA allowances (and those of your family)

This seems like such an obvious thing to do, and yet only 21% of people used up their full ISA allowance last year, according to a recent survey from Nationwide.

You’ll probably already know that ISAs are efficient tax wrappers for savings and investments, but did you know that:

• You can save or invest into an ISA and you can now choose how to invest this between stocks and shares, property or cash – all managed through a simple online platform

• This year’s allowance is £15,240. From 6 April 2017, this rises to £20,000 per person

• You don’t have to pay tax on any profits made in an ISA. This includes capital gains, income and inheritance tax. You can even pass on your ISA to a spouse after death, which they will inherit tax-free

• Dividend income is received tax free in an ISA. Outside of an ISA, you pay 0% on the first £5,000 of dividends. Then basic rate taxpayers pay 7.5%, with higher rate taxpayers paying 32.5%. Additional rate taxpayers will pay 38.1% tax on any dividend income outside of an ISA. You can see why it’s worth keeping your shares in an ISA if you want to pay no more tax than you need to

• It is possible to switch providers, but always consult your financial adviser before doing so. If you withdraw the money yourself into your bank account, you could potentially lose many of the tax benefits

• If you have children, Junior ISAs and Child Trust Funds are also a great way for you to save tax prior to 5 April. The limit for both for the 2016/17 tax year is £4,080

Wow can help you pick the right ISA for you, choose funds that match your attitude to risk and get everything setup for you. We can also review the performance of any investments that you hold within an ISA, plus you’ll get the benefit of your accountant and financial planner working together to make your life easier and save you tax.

Please get in touch if you need any assistance – we’re here to help.

This is part 1 of a 3-part series designed to help you save tax prior to the end of the personal tax year. Next time, we’ll review how Enterprise Investment Schemes will help you save tax prior to 5 April.