Couples - Spring Clean your finances

With the 5 April deadline approaching, now is a good time of year for married couples and civil partners to think about rearranging their finances in the most tax efficient manner. Easy options to consider are as follows:

Personal allowance – where possible, rearrange income so that both spouses utilise their allowance, which is increasing from £11,000 to £11,850 in April 2018. Where one spouse does not use the whole of their personal allowance, there is scope to transfer up to £1,150 to their spouse, if they are a basic rate taxpayer, potentially saving tax of £230.

Savings allowance – the first £1,000 of savings income, such as bank interest, is tax free for basic rate tax payers, with the allowance reducing to £500 for higher rate taxpayers. Couples in receipt of significant savings income should consider reorganising accounts so that each takes advantage of this allowance.

Capital gains tax  (CGT)– each person is entitled to a tax free annual allowance, currently £11,300. Higher rate tax payers are then charged 10% more than basic rate taxpayers on any gains in excess of this. Prior to disposing of any assets, such as an investment property, consideration should be given to reallocating the ownership to take advantage of each person’s individual allowance and the differing tax rates.

Dividends – currently, the first £5,000 of dividends per year is tax free, but this allowance is decreasing to £2,000 from April 2018. Couples with shares in their own companies, should consider reallocating share ownership, and declaring additional dividends before 6 April to use the £5,000 allowance in full.

Lentells are able to advise couples on all aspects of tax planning. Please contact your local office for more information.

Chard 01460 64441 -  jane.jordan@lentells.co.uk

Seaton 01297 20584 - michael.griffiths@lentells.co.uk

Taunton 01823 286274 - debbie.thatcher@lentells.co.uk