This time of year is the perfect time to think about the many tax allowances, exemptions, and reliefs that may be available to you before the end of the tax year. Act now to start getting the benefits as soon as possible.
The current tax year ends on 5 April 2023; here’s a quick guide to maximising all of the allowances, exemptions and reliefs available to you.
- Consider maximising your ISA allowance. The maximum limit is £20,000. This can be split between the various types of ISA with up to £4,000 in a Lifetime ISA for those who are eligible, which will attract a 25% government bonus.
- It may be advisable to maximise your pension annual allowance to benefit from tax relief of 20%, 40% or 45% on a contribution up to £40,000 depending on your individual circumstances. Remember the annual allowance reduces by £1 for every additional £2 of an individual’s ‘adjusted income’ over £240,000, if your ‘threshold income’ exceeds £200,000; resulting in an individual personal allowance between £4,000 and £40,000.
- Consider carrying forward any unused pension annual allowance from the previous 3 years if applicable.
- Make the most of your £2,000 tax free dividend allowance; if you have fully utilised this but your spouse/civil partner has not you could transfer yielding assets to maximise this allowance going forward.
- Similarly with the savings allowance which is £1,000 for basic rate tax payers and £500 for higher rate tax payers, savings can be transferred between spouse/civil partner to fully benefit.
- For other investments outside of a pension/ISA or other tax-efficient wrapper; take an investment gain if possible to maximise your £12,300 capital gains tax exemption.
- If you have potential Inheritance Tax liability, consider utilising your £3,000 annual gift allowance to reduce your estate.
- t is worth remembering tax efficient investing on behalf of children or grandchildren. The Junior ISA subscription limit for this tax year is £9,000 and provides the same tax-free growth benefits as an adult ISA, but remember the assets will be locked away until the child reaches 18. Children can also benefit from 20% tax relief on net pension contributions up to £2,880 per annum; if you want to give their retirement savings a head start.
For help in any of these areas, please contact us on 020 7220 1666 or via email at firstname.lastname@example.org