It’s that time of year again… The run-up to the tax year end on 5th April 2018 provides an opportunity to finalise your affairs for the 2017/18 tax year. We outline below the easiest ways to ensure your finances are managed tax efficiently:


The ISA allowance of £20,000 per tax year provides a great opportunity to move funds into a tax free environment. This can be funded from cash or by recycling investments in your general investment account, potentially also utilising part of your Capital Gains Tax allowance.

A Flexible ISA allows you to replace any funds withdrawn within the same tax year without it counting as part of
the annual allowance.

Finally, you can also make provision for children under 18 using the Junior ISA. You can contribute up to the £4,128 allowance which cannot be accessed until the child turns 18.


Pensions are extremely tax efficient benefitting from: tax relief on the contribution (of up to 45%, 20% upfront with the balance via your tax return); tax free growth; 25% tax free cash entitlement on retirement; and exemption from your estate for inheritance tax purposes.

Current UK legislation allows you to contribute up to 100% of your UK earnings each tax year and receive tax relief, up to the annual allowance of £40,000 (gross). Unused allowances from the preceding three tax years can potentially be “carried forward”.

However, there are also complexities with pension regulations affecting high earners with earnings in excess of £150,000, whose allowance may be reduced to £10,000 and those whose total pension assets are likely to exceed the Lifetime Allowance, currently £1M. It is therefore important to seek advice to ensure you benefit from the expected tax efficiencies.

Capital Gains Allowance

Capital Gains Tax (CGT) is payable on your total capital gains above the tax-free allowance of £11,300. The CGT rate on investments is 10% for basic rate and 20% for higher rate taxpayers. For properties other than your primary residence, the rate is increased to 18% and 28% respectively. Using this allowance annually can save tax on investments of up to £4,520 for a couple liable to higher rate tax, enabling portfolio optimisation and ISA funding.

Charitable Donations

Philanthropic donations benefit both the donor and recipient. Many people are familiar with Gift Aid, but even more efficient is the gifting of investments. The donation is deducted from your taxable income, exempt from CGT and is immediately outside of your estate for IHT purposes.

Inheritance Tax

You are able to gift £3,000 annually which is exempt from IHT. You can carry forward any unused exemption from the previous tax year so could gift up to £6,000. Gifts out of surplus income are also exempt provided they meet certain criteria.

Personal Allowance

Those with income falling between £100,000 and £123,000 suffer a punitive effective tax charge of 60% due to the loss of your tax free personal allowance. Making pension contributions or charitable gifts can reclaim the personal allowance by adjusting your effective income.

VCT, EIS and SITR Investments

A further, higher risk option to potentially consider once other allowances are used are Venture Capital Trusts, Enterprise Investment Schemes, Seed Enterprise Investment Schemes, and Social Investment Tax Relief. They offer substantial tax incentives to encourage investment into small companies. On top of income relief of 30% (50% for SEIS), VCTs benefit from tax free dividends, while EISs shelter CGT and are IHT efficient once held for 2 years. They are only suitable for certain investors who can tolerate high risk to their capital and are planning to invest for at least 5 years.

Contact us

Whether it’s a question about your personal finances or how you can invest your wealth more ethically, we are here to help. Call us on 020 7812 1460, email or complete the form: