Have you used your 2019/20 £12,000 annual capital gains exemption? Consider selling shares where the gain is less than £12,000 before 6 April 2020. Also, 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 tax of up to 45% of the loss.
There are frequent rumours that pension tax relief will change in the Budget. This is even more likely this year as the new Government looks for additional tax revenue to fund its ambitious spending pledges such as the HS2 rail link.
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 year, but then lapses if unused.
Your maximum annual investment in ISAs for 2019/20 is £20,000. Your investment needs to be made before 6 April 2020. In addition, have you thought about investing for your children or grandchildren by setting up a Junior ISA? In the 2019/20 tax year, you can invest £4,368 into a Junior ISA for any child under 18.
If you are looking for investment opportunities, have you considered the Enterprise Investment Scheme? These investments in certain qualifying companies allow you to set off 30% of the amount invested against your tax bill as well as the ability to defer capital gains tax until the shares are sold.
Your business year-end, not 5 April, is relevant for capital allowances purposes. If however you are running a business and making up accounts to 31 March or 5 April you should consider buying plant and machinery to take advantage of the £1 million Annual Investment Allowance.
It will be nearly 18 months since the last Budget and in the meantime we will have had three different chancellors following the unexpected resignation of Sajid Javid. The early years of a new Parliament are a good time to make radical changes and many are predicting significant tax announcements on 11 March, 2020.
If the draft legislation issued for consultation last year is enacted in the next Finance Act there will be important changes to private residence relief for disposals after 5 April 2020. Firstly, the exemption for the final period of ownership will be reduced from 18 months to 9 months.
Another announcement to listen out for in the Spring Budget on March 11 is whether the Chancellor acts on the recommendations of the Office of Tax Simplification (OTS) regarding inheritance tax. As reported in an earlier newsletter, the OTS suggested simplifying inheritance tax on lifetime gifts including reducing the period of potential exemption from 7 to 5 years.
From 6 April 2020 there is a major change in the reporting and payment of Capital Gains Tax on residential property disposals. From that date, it will be necessary to report the disposal of the property within 30 days of completion of the disposal and pay Capital Gains Tax on account to HMRC.
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