It is doubtful that HMRC will change the tax year end date. The current tax year will therefore come to an end on 5 April 2021.
Which means that tax-payers still have two months (February and March 2021) to take advantage of any tax planning strategies that may advantage their tax liabilities for 2020-21.
As COVID disruption is likely to take most of 2021 to unwind – and may spill over to 2022 – any action you can take to reduce a drain on cash flow by saving tax should be considered.
For example:
- If your self-employed business income has dropped significantly during 2020-21, any tax losses created may be available to carry back to previous tax years when you paid tax. As a result, it may be possible to boost your cash flow with a tax repayment.
- You still have time to fully utilise any capital gains tax exemptions for 2020-21.
- Have you considered the annual gifts allowances that are basically tax-free for 2020-21?
If your finances allow, have you considered:
- Topping up your pension contributions?
- Making further charitable donations to reduce higher rate tax?
- Strategies to reduce your income below £100,000 and thus avoid losing all or part of your personal tax allowance.
- If you or your spouse has increased their taxable income to more than £50,000 during 2020-21, and you claim child benefits, this may trigger an additional tax charge to recover all or part of the child benefits you have received.
To check out these and numerous other tax-saving opportunities please call so that we can discuss your options. Your chance to take advantage of tax planning ideas for 2020-21 will end for individuals on 5 April 2021.