hourglass and April 5th calendar tax year end coming

5th April is coming! Top 10 things to do before the end of the tax year

Kirsty Young News, Tax

The end of the personal tax year is approaching fast, but don’t panic! There is still time to do a few things to save tax / lower your tax bill.

If you own a limited company, this is especially important. You don’t want to miss out on drawing £2000 out of your company tax free, using a ‘use it or lose it’ allowance that you must claim by 5th April 2021.

Here are the top 10 tax-saving opportunities you need to look at before 5th April 2021.


1 Check Your Dividends

If you are a limited company owner, review your dividends. As a taxpayer, you have a generous allowance of £2000 of tax-free dividends available.

Check out our latest blog on the company dividends tax allowance.

Timing is crucial. If you already use your dividend allowance, you need to make sure you are timing your dividends correctly. So, make time to review when you pay yourself a dividend with help from our blog “Saving tax is all in the timing”.


2 Max out your ISA Allowance

Most people with an ISA receive at least £500 worth of interest tax-free every year. If you are likely to exceed this limit, and would therefore be paying tax on your savings interest, consider putting your savings into an ISA.

On April 6th 2021, the ISA limit resets to zero, so you can add more money into your existing ISA or open a new one with a better rate if you already have one.


3 Use All your Pensions Allowance

You have until 5th April to make any additional pension contributions for 2020/21. There is an annual tax year ‘cap’ of £40,000 (in most cases) on contributions to all of your private pensions. If you are a higher rate taxpayer, you can save tax by contributing up to the limit available.

If you are a limited company, consider making “employer’s” contributions directly from your company instead. This will reduce your company’s corporation tax bill, and boost your pension pot at the same time.

For more information, see the government website on the private pension annual allowance.


4 Donate using Gift Aid

If you have any charitable donations to make, be sure to make them before 5th April 2021. If you are a higher rate taxpayer this can save tax for you. It also (usually) boosts the value of your donation to the charity.

You’ll need to make a Gift Aid declaration so that the charity can them claim Gift Aid. If you haven’t done this already, you can include all donations made over the last 4 years, so long as you paid tax in each of those four years.

See the Gov website for more details on Gift Aid


5 Check your Child Benefit

Child Benefit is means-tested. So, if you or your partner are likely to exceed £50,000 income in this tax year (including bonuses and commissions) and are in receipt of child benefit, you could be subject to the High-Income Child Benefit Tax Charge. This means that effectively, you can end up repaying all of the child benefit you have claimed. If this applies to you, you should consider whether it is worth claiming Child Benefit at all.


6 Reduce Capital Gains Tax

Capital Gains Tax applies when you sell big (‘capital’) items such as shares or investment properties. You have a taxable ‘annual capital gains allowance’ that you can use against your gains.

If you’re considering selling several ‘big ticket’ assets anytime soon, it is worth considering disposing of at least one before the end of the tax year. So, splitting selling some items across tax years can be a smart way to be tax efficient.


7 Claim Your Marriage Allowance

You can ‘transfer’ some of your tax-free personal allowances to your other half or vice-versa. You can save around £230+ a year in tax when used in the right way. However, this does not apply if one of you is paying higher rate tax. Find out more and apply for the marriage tax allowance here.


8 Review Your Salary

If you are a limited company owner, you should review your PAYE (Payroll) salary to make sure you have it set at the most efficient level.

It can be worth paying yourself a bonus, or more March salary if you haven’t used all of your allowances. Check with a professional if you are unsure how to do this.


9 Tax Relief for Landlords

If you are considering replacing items or repairing your property over the next few months, bringing that work forward to before 5th April 2021 will get you the tax relief quicker.


10 Buying Big Stuff

This one is interesting this year. If your company year or sole trader accounting year ends on the 5th April 2021, it is usually a good time to bring forward expenditure you might be making soon, such as equipment or vans, to reduce your next tax bill.

However, there has been an announcement in the budget that from 1st April 2021 you can get 130% off many items, so it might be worth holding off to maximise the total discount if you are a limited company. Read more about this new ‘Super Deduction’ in our budget 2021 blog.

Or download the latest Super Deduction guidance


Time to call your accountant (or call us)

These are just some key points to review before the 5th April 2021. If you have an accountant, they can advise on whether these are right for your situation.

If you don’t have an accountant, or perhaps are looking to change, we’re here to help! Heelan Associates provide accountancy services for hundreds of private clients and companies, from bookkeeping and payroll to corporation tax and company dividends. So, why not: