| Who is affected? |
Description |
Action to take? |
| HIGH EARNERS |
The personal allowance is reduced by £1 for every
£2 of net income over £100,000. As a result, the
marginal rate of tax for income of between £100,000
and £125,140 could be as high as 60%. |
If your income is close to these thresholds,
consider ways to reduce your taxable income,
such as making pension contributions,
charitable donations, deferring income into
2022/23 or transferring income-generating
assets to your spouse. |
| HIGH EARNERS |
Any donations to charity will reduce your tax liability
by extending your basic rate band. For example, if you
donate £800, this is grossed up to £1,000 on your
tax return, and your basic rate band is extended by
this amount. If you are a higher rate taxpayer, this
will reduce your tax payable by at least £200. |
Consider making additional charity donations
before 5 April 2022. Also, dig out any gift aid
certificates, so that they can be included on your
tax return.
If you are a partner in a partnership or LLP,
ensure that any donations are made in your
own name, not through the partnership, to
ensure tax relief is available. |
| HIGH EARNERS |
The annual allowance for pension contributions
is £40,000 for 2021/22, although this is reduced
proportionately for individuals with taxable income
above £240,000, until it reaches a maximum
contribution level of £4,000 at a total taxable income
level of £312,000 (or more).
Anyone who is a higher rate or additional rate taxpayer
will receive tax relief at their highest marginal tax rate
on any contributions into pension schemes. |
Consider making additional pension
contributions to utilise your allowance for
2021/22. It is also possible to make use of
unused pension contribution allowances
for the previous three tax years.
Specific pensions advice needs to be taken
before making any decisions. |
SAVERS/
INVESTORS |
The savings nil rate band means that the first £1,000
of savings income is tax free for basic rate taxpayers.
This drops to £500 for higher rate taxpayers and to
nil for additional rate taxpayers.
In addition, for individuals that only receive investment
income in excess of the personal allowance, the first
£5,000 of interest will be subject to the starting
savings rate of 0%. |
If you are a higher rate or additional rate
taxpayer, and you receive large amounts of
interest income, consider transferring savings
held in your own name to your spouse.
If you have loaned money to your company,
consider paying yourself a commercial rate on
the loan to fully utilise these allowances. The
company will need to deduct basic rate tax and
submit a form CT61 to HMRC. |
| SAVERS |
The maximum investment limit for an individual
savings account (ISA) is £20,000 per person in
2021/22 for UK residents. Any growth in the ISA
is free of both income tax and capital gains tax. |
If you have surplus cash, consider utilising some
or all of your ISA investment limit. Junior ISAs
are also available for children under 18, up to
a maximum of £9,000 in the current tax year.
Advice is recommended before making
any investment. |
| PARTNERS |
As a partner, if you incur business expenses
personally and are not reimbursed by the practice,
you may be able to deduct them from your taxable
profits and reduce your tax bill. Common expenses
include motor running costs, funding of capital and
working from home costs. |
Make a list of all expenses that you have incurred
personally, where you believe that there is an
element of business usage. Have this to hand to
send to your accountant when you submit your
tax return information |
| SHAREHOLDERS |
The dividend allowance means that the first £2,000
of dividend income is tax free. |
Ensure that you have fully utilised your dividend
allowance for 2021/22. If not, consider paying
yourself a dividend. Spouse planning may also
need to be considered. |
| SHAREHOLDERS |
Director/shareholders should review their
remuneration package in advance of the tax year,
to ensure that it is as tax efficient as possible. |
Consider paying a combination of low salary, high
interest and high dividends. This could result in
tax-free income of up to £20,570 in both 2021/22
and 2022/23 (and double that for couples),
depending on the circumstances of the individual. |
| INVESTORS |
The capital gains tax annual exemption for 2021/22
is £12,300. Any unused exemption is lost. |
Try to use the annual exemption as far as possible.
Consider making a transfer of assets between
spouses, where appropriate. If the annual
allowance has already been used, consider
deferring further disposals into the new tax year. |
| INVESTORS |
There are various Government-backed investment
platforms, such as enterprise investment scheme
(EIS), seed enterprise investment scheme (SEIS)
and venture capital trusts (VCTs), that give the
incentive of income tax relief in exchange for the
underlying investment carrying a varying degree
of commercial risk. |
If you have surplus cash, consider making a taxefficient
investment. Certain conditions must
be met to obtain the available tax reliefs, which
would need to be carefully considered.
Again, investment advice is recommended here. |
INVESTMENT
PROPERTY
OWNERS |
Mortgage interest relief is now restricted to the basic
rate of tax, resulting in a significant increase in the
effective tax rates for some landlords, particularly
where they are higher earners. |
Where you have borrowings attached to
rental properties, review your operating
structure to see if the arrangements can
be made more tax efficient. Options include
spousal transfers, use of partnerships
or incorporation. |