Tax Year End

By Jade Shelton

As the tax year end approaches, it’s essential to take time to reflect on your financial standing and plan for the coming year. This is an optimal time to ensure you’re fully utilising the various allowances available to you and to take any necessary actions to secure your financial future.

ISAs

One of the most important allowances to consider is your Individual Savings Account (ISA) allowance. This is a type of savings account that you can use to hold stocks, shares, or cash and any interest or gains you make are tax-free. The current ISA allowance is £20,000. If you haven’t already, and you have the surplus funds to do so, then consider maximising your ISA allowance to take advantage of this tax-free saving opportunity.

Pensions

Another crucial area to think about is your pension contributions. Pensions are tax-efficient savings vehicles, and the government provides tax relief on your personal pension contributions. The annual allowance for pension contributions is currently £60,000, or 100% of your relevant pensionable earnings (whichever is lower). If you have the means, contributing the maximum amount to your pension can provide significant tax benefits. Also, if you are a business owner, and an employee of your business, then this is a great opportunity to extract profits from your business and make employer pension contributions. This has double benefits as not only does it increase your retirement provision, but it also an allowable expense and reduces corporation tax too!

Capital Gains Tax 

Capital Gains Tax (CGT) is another area to review. Each individual has an annual tax-free allowance, known as the Annual Exempt Amount, for capital gains. For the current tax year, this stands at £6,000. HOWEVER.. this is reducing further to £3,000 from 06 April 2024.  So, if this is relevant to you, it is definitely worth looking into to either ensure that you are aren’t breaching this allowance and if you are, that you are fully aware of it and what this means.

Tax Code

Checking your tax code is another important year-end task. Your tax code tells your employer or pension provider how much tax to deduct from your pay or pension. If your tax code is incorrect, you could end up paying too much or too little tax.

Self-Assessment

If you’re self-employed, preparing for your self-assessment is a critical year-end action. Ensure you have all your income and expenses accurately recorded. This will make it easier to complete your tax return, which is due by January 31st following the end of the tax year.

In summary, taking the time to review your financial affairs at the end of the tax year can help you maximise your allowances, manage your tax liabilities, and prepare for the new tax year. If you’re unsure about any aspect of your financial planning, it’s always a good idea to speak to a regulated professional (like ourselves) so that you can be rest assured that you’re structuring your finances in the most tax-efficient manner.

This is for information only and does NOT constitute as financial advice.