2021 Early Tax Year End Planning Income Tax
Published / Last Updated on 11/12/2020
Child Benefit: If you earn more than £50,000 pa, you start to have child benefit reduced. If you earn more than £60,000 your child benefit is reduced to zero. By making pension contributions to keep your income at or below £50,000 you protect your child benefit.
Losing Personal Tax Allowance: For every £2 you earn over £100,000, your personal tax allowance (£12,500) is reduced by £1. This means that if you earn £125,000 you have zero personal allowance, that’s an equivalent tax rate of over 60%. By making pension contributions early, you can reduce your earnings to below £100,000 and get your full personal allowance back.
Transfer Personal Allowance: If you are a low earner and do not use up your personal allowance but your partner earns more, you can transfer 10% of your personal allowance to your partner. Millions of people fail each year to do this.
Make sure you use all the allowances that you can:
- Uniform allowance
- Bicycle allowance
- Claim expenses not paid for by your employer
- Claim household expenses given manty people have worked from home this year.
Use all the allowances you can but don’t wait, get some early tax year end planning done now. Contact us.
