No one wants to pay more tax than necessary. As of February 2024, the countdown to the end of the 2023/24 tax year has begun, leaving mere weeks until the 5 April deadline to utilise your tax-free allowances and reliefs for this tax year...
So now is the perfect time to learn about the tax incentives and options available to you, and to take action to help ensure you don’t pay unnecessary tax.
Why tax allowances and reliefs matter
Yearly tax allowances and reliefs can help to reduce the amount of tax you need to pay and, ultimately, save you money. Ensuring investments are in the right name, ownership and tax shelter is a fundamental part of good financial planning.
In February 2024, what now seems quite certain is that allowances are not going to get any more generous over the next few years. In fact, most allowances and reliefs have been frozen until at least 2026, meaning that over time individuals are likely to end up paying more tax. The value of good financial planning and the savings you can make by maximising your allowances is now more important than ever.
We’ve listed here below a number of the most common and useful allowances for you to consider…
ISAs and Junior ISAs
Did you know? You can invest up to £20,000 in the 2023/24 tax year and all future investment growth will be free from personal income tax and capital gains tax. There are a number of options including cash ISAs, stocks & shares ISAs and Lifetime ISAs. You can put all of the £20,000 in any one of them or split the allowance between them.
Parents or guardians can also open a JISA for their children. The JISA has all the tax benefits and investment choices of the normal ISA – all income and capital growth is free from personal income tax and capital gains tax. The annual investment limit is £9,000 and you can split this between a cash JISA and stocks-and-shares JISA however you wish. Although only parents or guardians can set up a JISA, anyone can pay into it. You have until 5 April 2024 to take advantage of this year’s JISA allowance.
Maximise your pension contributions
As well as making the most of your ISA allowance there are other tax-saving steps you can take such as paying a pension contribution. You can save as much as you like into as many registered pension schemes as you like and get tax relief on those contributions of up to your annual allowance each year, provided you pay the contribution before age 75. Do this by the 5 April and, within certain limits, you will receive basic rate tax relief on your contribution. If you’re eligible for higher-rate tax relief you can claim this through your tax return. The annual allowance for tax relief in 2023/24 is 100% of your earnings (salary and other earned income) subject to a maximum of £60,000.
Don’t forget IHT and capital gains tax
You can give away up to £3,000 in this tax year and it will fall outside your estate for inheritance tax purposes. You can also make gains of up to £6,000 without incurring capital gains tax.
How we can help
While it makes perfect sense to start planning now for your financial future, we understand that ‘life’ can often get in the way. By investing less than an hour with us initially, together we can explore how to make the most of the tax allowances provided by the government.
To find out more, call our team on 0161 764 9944 or email contact@financialopts.co.uk
Tax treatment varies according to individual circumstances and is subject to change.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested. For ISAs investors do not pay any personal tax on income or gains but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA manager.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited 2.2.24