By Billie Richards – Tax & Trust Administrator

In just 6 weeks on the 5th April, we shall be at the end of another tax year. Have you made use of all your allowances to reduce your tax liabilities? Perhaps you would like to reduce your Inheritance Tax bill on death by giving away some assets. Do you know you can give away assets free of Inheritance Tax up to certain limits annually?

For example, each individual has an annual exemption of up to £3,000 a year that they can give to whom they choose.

This can be carried forward to the following tax year if not used, or if you did not use the annual exemption for the previous year, you could now gift £6,000.

Smaller cash sums of up to £250 can also be gifted to any individuals. There is no limit to the number of individuals, providing you have not given them a further gift using your £3,000 annual exemption.

You can also make wedding gifts. You can give up to £5,000 for a child, £2,500 for a grandchild and £1,000 to any other relative or friend.

There may also be tax benefits in gifting more than your annual exemptions.

Perhaps you have a charge to capital gains tax in the year. It is not too late to incur losses to offset against these gains such as selling shares that have fallen in value. We would of course suggest you speak to your financial advisor before doing so.

Some gifts are free of capital gains tax, such as between spouses and civil partners or to charity. There are also a number of reliefs available, such as Business Relief, Agricultural Property Relief or Holdover Relief. All of which could reduce your charge to capital gains tax.

Have you made use of your annual ISA allowance this year? You can invest up to £20,000 in an ISA for the tax year to 5 April 2021. ISAs can be very favourable as no tax arises on any capital gains or income received. This tax benefit can also extend to your spouse or civil partner on your death and even your executors, subject to conditions. There are a number of different types of ISAs . The main two being a Cash ISA and a Stocks and Shares ISA. You must, however, take into account all subscriptions made in the year to ensure you do not exceed the limit. For example, you can not invest £20,000 in each of a Cash ISA and a Stocks and Shares ISA, but you could invest £10,000 in each.

To benefit from any of the above, any transactions should be made before 5 April 2021 and you should seek professional advice before doing so. Should you require advice about any of the above please contact the Private Client Team on 01626 202404.