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10 Steps to Take With the New Tax Year Underway

By Questa

With the new tax year underway, taking proactive steps can not only improve your financial health but also position you to take full advantage of various tax benefits and savings opportunities. Here’s how you can get ahead as the 2024-25 tax year unfolds:

 

Understand Your Tax Allowances

 

1. Stay Informed on Changes

   Each new tax year potentially brings changes to tax-free allowances. For instance, the Capital Gains Tax allowance is now reduced from £6,000 to £3,000. Understanding these changes is crucial for planning financial moves and investments effectively to minimise your tax liability.

 

2. Know Your Income Tax Slabs

   Be aware of the income tax thresholds and any adjustments in the tax rates. This knowledge will help you to optimise your tax planning strategies, such as spreading income over several years, if possible, to remain within a lower tax bracket.

 

Maximise Your Savings

 

3. Utilise ISA Allowances

   ISAs continue to be a tax-efficient method to save and invest. Newly introduced rules now allow you to split your ISA allowance across multiple accounts of the same type, which provides flexibility and helps in tailoring your investments to better meet your financial goals.

 

4. Review Other Savings Options

   Apart from ISAs, explore other savings instruments like bonds, mutual funds, and stocks that can also offer tax-efficient growth or returns.

 

Enhance Your Pension Contributions

 

5. Increase Pension Savings

   The start of the tax year is a perfect time to increase your pension contributions. Contributions to your pension are tax-free up to a certain limit, providing immediate tax relief and reducing your overall taxable income.

 

6. Understand Tax Relief Benefits

   Tax relief on pensions is automatically at 20% for basic rate taxpayers. Higher and additional rates allow taxpayers to claim further tax relief, making it a highly efficient way to save for retirement.

 

Budget and Financial Goals Review

 

7. Reassess Your Budget

   Life changes such as a new job, a pay rise, or changes in your family structure (like having a baby or getting married) can impact your financial planning. Review your budget with these changes in mind to better allocate your savings or adjust your spending.

 

8. Set Clear Financial Goals

   Clear, actionable financial goals set early in the tax year can guide your spending and savings behaviour, helping you avoid unnecessary or impulsive financial decisions.

 

Manage Your Documentation

 

9. Organise Tax Documents Early

   If you’re self-employed, start the tax year by organising receipts and tracking expenses and income meticulously. This habit will simplify your tax filing process and can help avoid last-minute rushes and errors.

 

Stay Informed and Seek Advice

 

10. Keep Updated on Tax Rules

   Tax rules and regulations are subject to change. Regularly check official resources or consult a financial planner to stay informed about relevant changes that could impact your financial decisions.

 

Bonus Step

11. Consult Financial Planner

 

A qualified financial planner can provide personalised advice based on the latest tax changes, helping you to navigate through your options and strategies effectively.

 

Conclusion

 

The onset of the new tax year is an opportune time to take control of your financial landscape. By understanding and utilising your tax allowances, maximising savings through ISAs and pensions, reassessing your budget, and keeping well-organized records, you can set a firm foundation for the year ahead. 

 

Ensure you stay informed about any changes. Consider engaging with a financial planner to tailor your plans to your specific needs, ensuring your money works as hard for you as possible. This proactive approach will help secure your financial future and potentially yield substantial tax savings.

 

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