8 Financial Planning Tips: End of Year Tax Planning for Doctors

I’m conscious that we are nearing the end of March. What does that mean… Brexit / or Brexit delay? No – I mean the end of year tax planning. Still ‘hungover’ from the January tax bill? You have until April 5^th to do some simple things that will help you save tax and achieve your financial goals. So in this 5 minutes I want to make you aware of some of these allowance, how to use them and as a result how to save tax!

Now this isn’t advice and I would suggest speaking to an advisor if you wish to do some of these strategies.

First things first:

1) Tax return:

Claim expenses associated with work, for example, exams, books, license fees, pension contributions – the list is endless! Speak to an accountant – they should be able to save you £££.

2) Your personal allowance:

Have you lost it? Do you earn between £100,000 and £120,000 a year? If the answer is yes, you effectively pay around 60% tax because your personal allowance decreases by £1 for every £2 you earn over £100,000. Be savvy – you can lower your ‘earnings’ simply by making a pension contribution or making a gift to charity and claiming Gift Aid. Yes – that easy.

Does your partner work? If not, did you know you may be able to claim their personal allowance?

3) Your ISA allowance:

You can save £20,000 this financial year tax-free, and the next and the next. Maximise your ISA allowance each and every year. Over time, that grows to a large amount of tax-free savings.

4) Pensions contributions:

Maximise your pension contribution each and every year! If you haven’t, then don’t despair – you can carry forward unused allowances from the previous 3 tax years. Remember – a personal pension contribution attracts tax relief. That is money BACK from the government. In doing so, you will be able to claim tax relief at your marginal rate.

As a 40% tax payer, if you pay in £600 the government will top it up to £1,000. If you earn over £150,000 per year and pay in £550 it will be topped up to £1000.

However . . . at the time of writing (the government likes changing the rules, it keeps me in a job!), if your earnings are over £150,000 you do need to be careful on how much you can contribute into a pension so I suggest you read my article on pensions – the sting in the tail, or speak to me or an IFA who is good on pensions!

5) Capital Gains Tax Allowance:

If you are investing and making gains – happy days, well done, but . . . are they getting pregnant? Will it cost you to disinvest? Perhaps you should utilise your CGT allowance by cashing in some of the investment and then re investing 30 days later.Or pop it into your ISA.

6) Other tax reducers:

Have you heard about Venture Capital Trusts or Enterprise Investment Schemes? These are exciting high-risk investments and come with attractive tax benefits, but it is best that you obtain solid advice from an IFA that specialises in this field, because they come in three sizes – some are good, some are bad, and some are ugly!

7) Your spouse:

A spouse is fabulous for a number of reasons, but one is that, if they earn less then you (or if you earn less than them), perhaps you should give them some of your money or vice versa? Yes – transfers between spouses don’t cause any CGT or IHT problems yet it means you can use up their CGT allowance if you want to cash something in. It also means the lower earner will pay a lower rate of tax on investments outside the sexy wrappers of ISAs, pensions, offshore bonds etc.

8) The joy of giving:

Give to charities. Not only are you encouraging someone to run around the park, or row the Atlantic, or whatever, for a good cause (mine is the latter), you can claim Gift Aid on the donation, so that is money in your pocket. Just make sure you claim it! In addition, if you are worried about the horrible tax bill (IHT) and are flush with cash, remember you can give away £3,000 each year and it won’t be part of your estate if you pop your clogs.

There are my 8 strategies that that can save you lots of money now and in the future.

As always these are just guidelines and not advice.

If you would like to have a chat about your individual situation, feel free to contact me directly:

Looking for some business coaching to help you grow your successful Private Practice?

Get in touch (Gemma@clinic-alchemy.com). We’re here to help.

Gemma Stanbridge.