Using other tax structures to reduce your tax bill

1. It is not too late to reduce your tax bill!
The deadline for paying any balancing payment for your 2016/17 income tax
together with the first instalment of the 2017/18 liability is only weeks away at
31 January 2018 but it is still not too late to reduce this.
Investing in an Enterprise Investment Scheme (EIS), Seed Enterprise
Investment Scheme (SEIS) or social investment tax relief (SITR) scheme
qualifies for a flat 30% relief which can be carried back to the previous year. *
So, for example an investment of £10,000 now could reduce a 2016/2017
liability by £3,000, plus that would reduce the 2017/18 payment on account by
£1,500 thereby reducing the amount payable on 31 January by £4,500 (as
payments on account in January are based on 50% of the previous year’s
liability).
Similarly, if you are a higher rate taxpayer you are entitled to 40% relief on gift
aid payments so a payment made now which is carried back to 2016/17 will
reduce payments in January. For example, a £1,000 payment made to charity
would mean a payment of £800 to the charity (less the basic rate tax relief of
£200 deducted at source). If this is carried back to 2016/17, the liability for that
year is reduced by £200 (being the higher rate relief of 40% less the 20%
already received) and the payment on account for 2017/18 is reduced by £100
(being 50%) giving a total reduction of £300.
*These are high risk investments and will not be suitable for everyone. It is essential that professional
advice is sought before investing.