The end of the tax year is fast approaching, so what should you do to prepare and make the most of your money ahead of the April 5th deadline?
Here are four key areas to look at before the 2023-24 tax year ends, so you can make the most of your money.
Maximise your pension contributions
Maximising pension contributions offers two big advantages - reducing your taxable income and boosting your retirement nest egg.
Basic rate taxpayers automatically receive 20 per cent tax relief on their pension contributions, and if you fall into the higher or additional tax brackets, you can get even more tax relief.
That means you can reduce your tax liability and get an instant boost to your pension pot at the same time.
You might also want to explore the option of signing up to a Salary Sacrifice scheme, which means you can redirect a portion of your pre-tax salary directly to your pension. That means you can not only reduce your taxable income, but also your National Insurance contributions too.
Use your Capital Gains Tax allowance
When you sell assets such as a personal possession or a property, you’ll be required to pay tax on the profits you make.
However, you currently have a Capital Gains Tax allowance of £6,000 to offset gains from asset sales and reduce your tax liability.
With that in mind, it’s worth thinking strategically about when you intend to sell assets, so you can make sure you remain within the allowance and avoid paying unnecessary tax.
Be aware that the allowance falls to £3,000 in the 2024-25 tax year, which means it might be worth taking advantage of the higher allowance before the current tax year ends.
Use your full ISA allowance
ISAs offer a tax-efficient way of saving and investing your money.
Whether you prefer the stability of a Cash ISA or the growth potential of a Stocks and Shares ISA, using the full £20,000 allowance can have considerable long-term financial benefits.
You can split your allowance across different types of ISA, although you’re not allowed to carry over any unused allowance from the current tax year into the next.
So if you’ve not yet used your full allowance, now’s the time to see how much more you can afford to save tax-free.
Claim Gift Aid when giving to good causes
Gift Aid is a simple way to boost the value of your charitable donations without incurring any extra personal costs yourself.
That’s because this mechanism gives charities the ability to recoup the basic tax rate of 20 per cent on your donation. So for every pound you contribute, the charity can claim an extra 25p.
The sheer complexity of tax law can make managing your personal tax affairs hugely daunting and a task you might be tempted to put off for another day.
But with the end of the tax year just around the corner, now’s the time to act and schedule a call with your financial planner, so you can be confident you’re making the most of your tax allowances and that your money is working hard for you.
Call us now to discuss your options.
