A few ways to save tax before the end of the tax year

The end of the tax year is nigh. You have until midnight on 5 April to take advantage of various tax allowances or risk losing them.

The end of the tax year is nigh. You have until midnight on 5 April to take advantage of various tax allowances or risk losing them. “Many savers may be nursing losses as a result of the recent heavy stockmarket falls and not feel inclined to think too much about putting their finances in order…but at a time when money is likely to be tight, it makes sense to make the most of any opportunities to save tax where you can,” says Mark Atherton in The Times.

You can put £20,000 into an individual savings account (Isa) every year divided between cash and investments. Many markets now appear cheap enough to yield healthy long-term returns. 

Next, consider if you have any gains outside your Isas you want to cash in. “With the stockmarket in turmoil… taking profits can seem slightly perverse, but it is vital to claim any tax relief,” says Atherton. You can make up to £12,000 a year in capital gains before tax is due. Married couples can cut their tax bill by claiming the marriage allowance. If one partner is a basic-rate taxpayer and the other earns below the £12,500 personal allowance the lower earner can transfer 10% of their allowance to the higher earner. This means a tax saving of up to £250 a year. 

Finally, most of us, except for top-rate taxpayers, have an annual pension contribution allowance of £40,000. You can also carry over unused allowances going back three years.

Recommended

I wish I knew what contagion was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what contagion was, but I’m too embarrassed to ask

Most of us probably know what “contagion” is in a biological sense. But it also crops up in financial markets. Here's what it means.
21 Sep 2021
Why is the UK short of CO2 and what does it mean for you?
UK Economy

Why is the UK short of CO2 and what does it mean for you?

The UK is experiencing a carbon dioxide shortage that could lead to empty shelves in supermarkets. Saloni Sardana explains what’s going on and how it …
21 Sep 2021
What to invest in to beat soaring energy prices
Investment strategy

What to invest in to beat soaring energy prices

As gas and electricity prices hit the roof, John Stepek explains how to invest to offset higher energy bills.
21 Sep 2021
Are Spacs just for suckers?
Investment strategy

Are Spacs just for suckers?

This year has seen a big boom in activity by special purpose acquisition companies (Spacs) in the US and the Spac craze is spreading to other markets…
21 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021