With the tax year ending 5 April, there are a number of matters to consider which could maximise your tax efficiency for the outgoing tax year. Please have a look at the points below and get in touch if you would like to discuss anything in further detail.


At Green Accountancy we are not independent financial advisers and cannot give advice on whether to invest or not, or what to invest in. We can advise on the tax consequences of investments.


Don’t lose your personal allowance (applicable if income exceeds £100,000)

For every £2 that your adjusted net income exceeds £100,000 the £11,850 personal allowance is reduced by £1. This restriction results in you effectively being taxed at 60% on income between £100,000 and £123,700.

Pension contributions and Gift Aid donations reduce adjusted net income so if you are considering making these in the future you might wish to make these prior to 5 April to bring you below this threshold.

Another way that you could avoid this trap would be to agree with your employer to sacrifice some of your salary in exchange for a tax free benefit in kind. These rules changed from 6 April 2017 but employer pension contributions, bicycles, and employer provided childcare would continue to be tax effective.


Don’t lose your child benefit (applicable if receiving child benefit and the highest earner exceeds £50,000)

If you or your partner receives child benefit and one of you earns over £50,000 some or all of this may need to be repaid. Once adjusted net earnings exceeds £60,000 all of the child benefit received will be payable.

Pension contributions and Gift Aid donations reduce adjusted net income so if you are considering making these in the future you might wish to make these prior to 5 April to bring you below this threshold.


Pension Planning

If you want to make pension contributions this year, you need to make sure these payments are received by your pension provider by 5 April. For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and their employer.

Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused. For example the unused pension allowance for 2015/16 will lapse on 5 April 2019 if unused. You must have been registered with a pension scheme in that year to be able to carry the allowance forward.


ISA Allowance

Your maximum annual investment in ISAs for 2018/19 is £20,000.  Your investment needs to be made by 5 April 2019.

You might also want to consider investing for your children or grandchildren by setting up a Junior ISA. In the 2018/19 tax year, you can invest £4,260 into a Junior ISA for any child under 18.


Dividend Planning (applicable for owner managed business)

There can be significant advantages to tax planning surrounding the timing of extracting dividends prior to 5 April each year. Please see our website for the full details. You may want to vote a dividend prior to 5 April to use up your basic rate band.


Buy new equipment (applicable for sole traders)

Any equipment purchases will reduce the tax liability. If you are thinking about purchasing new equipment you may want to do this prior to the 5 April. This will then mean that you receive the tax relief in this period instead of the following year.


Capital Tax Planning

Have you made use of your 2018/19 £11,700 annual capital gains exemption?  Consider selling shares where the gain is less than £11,700 before 6 April 2019. In addition, if you have any worthless shares, consider a negligible value claim to establish a capital loss. You may even be able to set off that capital loss against your income under certain circumstances which could save income tax of up to 45% of the loss.


Inheritance Tax (IHT) Planning

All individuals have a £3,000 annual allowance which means that gifts up to that amount each year are exempt from IHT. If you have not used your £3,000 allowance from 2017/18 you can make gifts of up to £6,000 before 6 April 2019 without the gift being liable to IHT. Also consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT.


Consider other tax efficient investments

If you are looking for investment opportunities, have you considered the Enterprise Investment Scheme (EIS)? These investments in certain qualifying companies allow you to set off of 30% of the amount invested against your income tax bill as well as the ability to defer Capital Gains Tax (CGT) until the shares are sold. An even more generous tax break is available for investment in a qualifying Seed EIS company where income tax relief at 50% is available and in addition it is possible to obtain relief against your 2018/19 capital gains. Both EIS and Seed EIS also provide a CGT exemption when the shares themselves are sold after 3 years.  Note however that qualifying EIS and SEIS companies tend to be risky investments so professional investment advice should be taken.

With similar tax advantages of EIS and SEIS there is also a tax relief scheme for social investments. This was introduced to encourage individuals to support social enterprises and to provide social enterprises with new sources of finance.  The investment must be in newly issued shares or qualifying debt investment in a social enterprise. Please see our website for further details.



As with all of our tax tips and web pages, this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.