And we’re off… Richard LishmanPromotional Features
Posted by: The Probe 3rd January 2018
Tax year planning for many ranks as one of those tiresome yet necessary tasks that must be completed no matter what – much like taking out the bin or cleaning the house. Without it, investments can wither, profits become stifled and tax contributions far exceed what they would do than if you’d planned efficiently. Luckily, it’s never too late for tax planning, and what better time to start than the beginning of the tax year.
There are a great many aspects to take into consideration, but by getting on top of your finances early rather than waiting until Q4 and beyond to execute your strategy, you’ve got a more realistic chance of achieving your goals and avoiding a huge tax bill – not to mention that it’s far less stressful. Checking your allowances and options in advance will also help you to maximise any potential benefits available to you, ensuring optimal return with minimal losses.
An Independent Financial Adviser (IFA) can help evaluate your position and assess the best way to approach the tax year, ensuring that you start as you mean to go on. Together, you then have time to watch your strategy unfold, as well as the space to make any necessary adjustments along the way. After all, the perfect portfolio and financial plan isn’t realised overnight; it takes continual nurturing and modifications to get it just right.
To achieve the best results and make your tax bill as efficient as possible for the tax year 2017/18, it might be worth considering the following: are your current investments effective? Are you taking advantage of new financial products? Are you on top of your tax bill? Are you utilising all the tax relief options available to you? Are your financial records up to date? And are you making the most of savings vehicles?
In terms of your investment portfolio, now is a great time to review your current investments as well as consider future assets that might be worthy additions. Diversification, as much as the assets that you choose, is integral to the balance and success of your portfolio, so take care to establish the potential risk versus reward of each individual investment and how they all work in tandem in relation to the bigger picture goal. Any cash assets, bonds, shares, equity funds and property that you have will need to be reviewed, taking into account any current market trends or relevant reforms that may have an impact on your investments’ performance over the course of the tax year.
With your cash savings, your private pension is always a good place to start. Like last year, the Annual Allowance (AA) will be £40,000 for 2017/18, so if you’ve got some extra cash that you’d like to put to good use or invest in a tax-efficient manner then it might be worth focusing on your private pension for this tax year. Of course, if your total savings pension (PIP) exceeds your AA it is possible to reduce the excess by carrying forward any unused AA from the previous three years, as long as you utilise your current PIP first. As it stands for 2017/18 the carry forward amounts are £40,000 for 2014/15, £40,000 for 2015/16 and £40,000 for 2016/17 – permitting that taper provisions do not apply. Don’t forget, however, that the rules around accessing a Money Purchase Pension Arrangement (MPPA) as a way of avoiding tax on current earnings have been tightened, limiting the extent to which pension savings can be recycled. Instead of £10,000, your MPPA is now just £4,000.
The new tax year is also a good chance to review Independent Savings Accounts (ISAs). As there isn’t the option of carrying over unused Allowance, the £20,000 AA must be used by 5th April 2018 or you lose it. For maximum return, it can pay to invest as much as you can as early as you can, though it is always best to discuss this with your IFA in case it conflicts with your other financial plans. It may well be that for 2017/18 other assets take a priority if the market looks to be performing better in that area.
In the meantime, be sure to make a start on your accounts preparation and stay on top of your bookkeeping, if you’re self-employed. With the whole tax year ahead of you, better to take advantage of the time you’ve got then leave everything to the last minute.
For effective tax planning in 2017/18, make sure that you get in touch with your IFA sooner rather than later. You have it in your power to be tax efficient and handle your money wisely so that you make the most of it, don’t squander that chance.
For more information please call 0845 345 5060, email email@example.com or visit www.money4dentists.com
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