City thinking, local knowledge

Get ready for the end of the tax year

By Questa Chartered

The end of the tax year is fast approaching and time is running out.

So in the weeks ahead of the April 5th deadline, what steps should you be taking to make the most of your money and reduce your tax bill?

Here are just a few areas you could look at.

Use your ISA allowance

You can save or invest up to £20,000 a year with a cash ISA, a stocks and shares ISA, or a combination of the two, tax-free.

If you haven’t invested this amount by April 5th, you can’t carry your allowance over and you’ll end up missing out.

Top up your pension contributions

You can pay up to £40,000 into your pension in a single tax year before you have to pay tax on it, so if you aren’t particularly near to this limit, diverting some money into your pension could be a good way to mitigate your wider tax bill.

Use Your Capital Gains Tax allowance

The capital gains tax allowance is to be reduced from £12,300 to £6,000 from 6th April 2023, and then reduced again on 6th April 2024 to £3,000.

That means you only have until the end of the current tax year to take advantage of the current, more generous, allowance.

Use your dividend allowance

A dividend allowance is an amount of dividends that you don’t have to pay tax on, which is currently £2,000. So if you’re a company director or shareholder, you can receive up to this amount tax-free.

Use your Personal Savings Allowance

This allowance lets you earn interest on your savings without paying tax on it, but the size of the allowance depends on your income tax rate.

If you’re a basic rate taxpayer (20 per cent), you can earn £1,000 in savings interest per year tax-free, while higher rate taxpayers (40 per cent) can earn £500 in savings interest per year with no tax. Additional rate taxpayers (45 per cent) don’t get an allowance.

 

This is by no means an exhaustive list, and many of these options may not even apply to you.

That’s why it’s definitely worth speaking with a professional, regulated financial adviser with experience in this field. They can talk through the choices open to you to help you make the right decisions.

April 5th isn’t far away, so don’t delay!

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