We are now just over a week away from the dreaded self-assessment tax return deadline which, combined with January blues, can make us feel as far away as ever from last month's festive cheer.
But it isn't all doom and gloom. In fact, there are ways to make you feel much better about your finances as the 31 January looms closer. It is simply a case of utilising the government's allowances and here are three ways you could minimise the taxable deductions on your investments:
As it currently stands, you can pay up to £32,000 per annum into your pension pot and the government will contribute a further 20% of the amount you have put in; this brings the tax-free total up to £40,000. Higher-rate and additional rate tax payers can, through their tax returns, also claim back an additional 20% to 25% respectively.
It is also worth noting that, even if you don't make the most of this handy wrapper in the current tax year, you can currently carry forward any remaining allowance from the previous three tax years.
However, bear in mind that contributions of more than £4,000 per annum could be taxed if you have already started taking money out of your pension pot.
The most commonly-cited way to minimise tax payments, an Individual Savings Account (ISA) allows you to shelter up to £20,000 each tax year. There is no requirement to pay tax on any income, capital gains or dividends paid over the tax year. There is also no need to enter any details about your ISAs on your self-assessment tax return.
Bear in mind that the end of the current tax year is fast approaching and, unlike your pension allowance, if you don't make full use of your £20,000 annual allowance, it will be lost forever.
Adventurous investors who have perhaps used up their ISA and pension allowances may wish to look at Venture Capital Trusts (VCTs).
There are significant tax incentives to encourage investment into VCTs because they invest into smaller companies, which should contribute towards a healthier economy.
Tax benefits include 30% income tax relief on the amount invested plus tax-free dividends and gains, as long as the VCT is held for at least five years.
Investors should note that VCTs are high-risk. Well-managed VCTs help mitigate these risks by investing in a diversified portfolio but you may get back less than you originally invested.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Sam's views are his own and do not constitute financial advice.