Last year we provided a 5 Easy Ways to Make Your Tax Year End a Success article aimed at providing a simple, thought-provoking guide to maximising your tax year end allowances, ensuring that you mad the most of your finances.

Following the numerous fiscal changes announced by Jeremy Hunt in the Autumn Budget, acting before the end of the current tax year is more important than ever. Here is a reminder of those taxes which are set to change in the upcoming tax year and actions you may wish to consider.

Income Tax – The rates of tax will remain the same for 23/24 (20%,40%,45%), however the level at which Additional Rate Tax is paid will be cut from £150,000 to £125,140.

What can be done?

  • Make pension contributions to reduce your Adjusted Net Income (ANI)
  • Marriage Allowance – transfer up to £1,260 of Personal Allowance to spouse if you have remaining Personal Allowance (below £12,570)
  • Consider Salary Sacrifice options, if possible, to reduce National Insurance and Income Tax paid
  • Consider investments which are eligible for Business Relief, such as EIS’s and VCTs (30% income tax reduction). 

Capital Gains Tax (CGT) – This is set to be reduced from £12,300 to £6,000 in 23/24 and cut again to £3,000 in 24/25.

What can be done?

  • Maximise your outstanding allowance in the current tax year
  • Utilise losses to reduce taxable gains
  • If married and a spouse is a lower rate taxpayer, consider transferring before surrendering
  • Consider pension contributions to extend the Basic Rate Band; Phase the sale across multiple tax years.

Dividends – The rates will remain at 8.75%, 33.75% and 39.35% in 23/24 but the allowance is being cut from £2,000 to £1,000 and then again in 24/25 to £500.

What can be done?

  • Transfer shares to spouses with lower tax rates
  • Be mindful of General Investment Accounts which are dividend producing as they count towards your dividend allowance

Corporation Tax – The corporation tax will increase to 25% from 1 April 2023, affecting companies with profits of £250,000 and over. Companies with profits below £50,000 will continue to pay Corporation Tax at 19%.

What can be done?

  • Make pension contributions
  • Extraction of Profits in a tax efficient manner
  • Utilise Dividend Allowance.

Other Tax Year End Matters to Consider:

ISA, JISA, LISA – If you can afford to, maximise your ISA allowances (£20,000 allowance for ISA’s, £9,000 Junior ISAs, £4,000 LISA’s).

Annual Allowance – This is currently £40,000. Maximum personal contribution to pensions is the higher of £3,600 or 100% of UK earnings (subject to having sufficient annual allowance remaining). Discuss pension contributions and Carry Forward with your Financial Adviser.

Gift Allowance – £3,000 annual amount can be gifted without being subject to Inheritance Tax calculations (unused gifts from previous tax year can also be used).

Should you have any queries or want to discuss anything within this article in more detail, please contact your Adviser.