April 2023
The New Tax Year
The ending of a tax year means that your tax allowances will reboot.
If you are self-employed, you submit a tax return; if you’re employed, your tax code will automatically refresh. Not only this, but it will make a difference to your ISA allowance, Inheritance gifting, and Capital Gains tax. It may also make a difference to your pension.
With the new tax year beginning this April, it may be too late to implement any last-minute tax efficient strategies before the renewal. However, if you do find that you are someone who leaves things to the last minute, perhaps making a plan with a financial adviser from the get-go will ensure that the end of the tax year period runs smoother in the future.
Your £20,000 ISA limit.
If you aren’t closing in on your allowance limit, then the end of the tax year isn’t something to worry about; if you find that you are close to reaching this limit, you may benefit from tax efficiencies as your allowance doesn’t roll over. Any returns on an ISA aren’t subject to income tax or Capital Gains tax. So, an ISA top-up may be the right option for you.
Your Capital Gains tax.
Everybody has an annual Capital Gains tax allowance: for 2022/2023 it was £12,300. So, if you sell or dispose of any assets, such as property, stocks, shares, etc. you won’t be taxed on your profits as long as they’re within this limit. An important note is that the Capital Gains tax allowance will reduce in 2023/2024 to £6000, which may impact your financial planning decisions for the next tax year.
Your Inheritance tax.
A tax-efficient way to reduce your estate value for Inheritance tax is gifting. The annual allowance is £3000. In addition, you can gift small amounts of up to £250 as many times as you wish to as many people as you choose, as long as they haven’t already received anything from your annual allowance.
Your Pension.
Similarly, it may be beneficial to top-up your pension. The annual allowance at the time of writing is roughly £40,000, but this depends on your circumstances, as is the income tax relief you can receive.
If you are uncertain about what is best for your circumstances, a financial adviser can help. So, even if you are a person who leaves things to the last minute, you don’t have to miss out. One tax year ends, and another one begins.
The advisers at Beacon Wealth Management can guide you.
Please call us on 01480 869466 for a free initial, no obligation chat.
Future fees may apply.
