Tax Planning Tips for the Year Ahead
Here are our top tax planning tips to help optimise your fiscal affairs in the coming tax year.
1. Use your allowances
Most allowances are set per tax year, and if you don't use them - you lose them!
2. Scottish Taxes – Scottish Rate of Income Tax (SRIT)
The Scottish Parliament has devolved powers over some tax matters, including the Scottish Rate of Income Tax which applies to non-savings and non-dividend income.
3. Scottish Taxes – Land and Buildings Transaction Tax (LBTT)
LBTT applies to property transactions in Scotland. There are different rates for residential and non-residential transactions – the marginal rates of residential LBTT can be as high as 15%.
4. Residential Property Taxes
Land and property continues to be popular with investors, despite the numerous changes made to residential property taxation over recent years.
5. Charitable Giving
Whilst the most common form of charitable giving is via gift aid, unexpected tax liabilities can sometimes arise. Here are our tips on how to avoid additional tax burdens on charitable financial gifts.
6. Inheritance Tax – Residential Nil Rate Band
With increasing property prices, more families will be brought into the scope of inheritance tax. This new allowance provides an additional relief.
7. Entrepreneurial Taxes and Tax Efficient Investments
Entrepreneurs’ Relief (ER) can reduce the rate of CGT to from 20% to 10%. There are also a limited number of tax efficient investments that may be made.
8. Residence and Domicile Changes
The Finance (No2) Act 2017 was enacted in November 2017, but it made significant changes to the residence and domicile position for many.
9. Making Tax Digital (MTD)
Although the Government’s plans for Making Tax Digital have been postponed, it is clear that the intention is to shift to more frequent digital reporting of income.
10. Pension Planning
Scottish resident taxpayers earning in excess of £26,000 will have a higher marginal rate of income tax than in the rest of the UK. This provides an added incentive to make pensions contributions.
The summary and top tips detailed above should not be regarded as tax advice, and Johnston Carmichael LLP assume no liability for any consequential loss from action taken, or not taken, by any individual (or other person).