Use your tax allowances before you lose them

There's one month left until the 2016/2017 tax year ends, so it's time to get your finances in order and make sure you are making the most of all the tax-free allowances that can reduce how much money you have to hand over to the taxman.

Personal Allowance

All of us can earn £11,000 this tax year before we have to pay income tax. While this is applied automatically by HMRC, if you are married or in a civil partnership it is in your gift to make used of the marriage tax allowance.

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If you earn less than the £11,000 tax allowance you can transfer up to £1,100 of your own unused allowance to your husband, wife or civil partner, if they earn less than £43,000 a year. This could reduce their tax by up to £220 in the tax year.

Capital Gains Tax

You can make gains worth up to £11,100 this tax year before Capital Gains Tax (CGT) is levied. Gains on investments held outside of an Isa, property, business assets and any personal possessions worth more than £6,000 are all liable.

Again if you are married you can potentially cut your bill. You can hand assets over to your spouse without CGT being due, so this can be a good way of utilising their CGT allowance as well as your own.

CGT is also waived if you are giving assets to charity.

Isas

The Isa allowance for the 2016/17 tax year is £15,240. That is how much you can deposit into a combination of cash and stocks and shares Isas. Once the money is in an Isa growth is free from income tax, CGT and dividend tax.

The Junior Isa limit is £4,080.

If you are planning to make long-term savings into an Isa and have the cash stashed elsewhewre, make sure you use this up to year's limit before the end of the tax year, so that you can benefit from the the full higher allowance of £20,000 next year.

Personal Savings Allowance

This is a new allowance that arrived in April 2016. It means basic-rate taxpayers can earn up to £1,000 interest on their savings before income tax is due. If you are a higher-rate taxpayer the allowance falls to £500 and additional rate taxpayers get no allowance at all.

Dividends

You can receive up to £5,000 in dividends this tax year before tax is due.

Inheritance Tax

Every tax year you have a £3,000 exempted gift allowance. This is money you can give away without it falling into the seven-year rule for inheritance tax purposes. Even if you gave it away today and dropped dead tomorrow it would not be liable for inheritance tax.

Also, if a friend or relative got married away you can give them at least £1,000 and it is counts as an additional exempt gift. If the person getting married is your grandchild or great-grandchild you can give them £2,500 and if they are your child you can give them £5,000.

Pensions

If you earn up to £150,000 you can receive tax relief on up to £40,000 paid into your pension this tax year (that includes employer contributions). You can carry forward unused allowances from the previous three years.

High earners have their annual pension allowance reduced by £1 for every £2 you earn over £150,000. The maximum reduction is £30,000 so even the highest earners can still get tax relief on £10,000 of pension contributions this tax year.