To-do list for the end of tax year: ISA allowance, Capital Gains Tax, Inheritance Tax gifts, and more
Time is rapidly running out to shield more of your cash from the taxman. Here are the top allowances and concessions to make use of before the 2023/24 tax year ends.
The tax year ends at midnight on 5 April, so time is running out to take advantage of these allowances and tax breaks!
Use your ISA allowance
Everybody gets an annual ISA allowance, which you can place in an ISA and enjoy interest or gains without having to pay any interest.
In the current tax year, that allowance stands at £20,000.
You can put away cash, invest in stocks and shares or have a mix of both.
But it’s a case of ‘use it or lose it’ as the ISA limit starts again on 6 April.
Stash some cash for your kids
Lots of banks and building societies offer children’s savings accounts, but a Junior ISA means that not only are the profits tax-free, but your offspring can't touch the money until they’re 18.
The current Junior ISA limit is £9,000 a year and, like the adult version, you need to use it before the end of the tax year or it's gone for good.
Boost your pension
Let's be honest, most people won't have to worry about exceeding the pension saving thresholds – especially once you factor in the Chancellor's overhaul of this area.
However, if you do have large sums of money to set aside for retirement, time is running out to use your 2023/24 annual pension allowance and get tax relief on up to £60,000.
For those who have already drawn money from their pension but still want to contribute money to their pension, the Money Purchase Annual Allowance is set at £10,000 for this year.
Use your Marriage Allowance
You can transfer £1,260 of your annual personal allowance (which is currently £12,570) to your husband, wife or civil partner.
This can reduce their tax bill by up to £252.
You can check on the Government's Marriage Allowance calculator.
There is also the Married Couple's Allowance. This can reduce the tax bill by between £401 and £1,037.50-a-year.
To apply, couples need to be married or in civil partnerships and living with each other. One of them also needs to have been born before 6 April 1935.
Read more about who is eligible on this Government webpage.
Give money away
If you die and your estate is worth more than £325,000, then Inheritance Tax is payable at 40% on everything over this limit.
But you can give away or ‘gift’ £3,000 per tax year, while unused allowance from the previous year can be rolled over.
There are other ‘exemptions’ which enable you to give away lump sums. For example, you can hand over up to £5,000 if one of your children is getting married, along with smaller amounts for grandchildren or others.
You can give as many gifts of up to £250 per person as you want each tax year, as long as you have not used another allowance on the same individuals.
Check out How to cut your Inheritance Tax bill.
Use your Capital Gains allowance
Capital Gains Tax (CGT) is paid if you make a profit selling any of your ‘assets’, like property, paintings or other valuables, although your main home is exempt.
Every individual can make profits of £6,000 in the current tax year before CGT kicks in.
If you do have any assets to sell off, you should make use of this year's allowance as it's set to be halved to £3,000 for the 2024/25 tax year. So there's never going to be a better time, tax-wise.
Read Ways to cut your Capital Gains Tax bill.
Use your Dividend Allowance
Some stocks and shares that you invest in will pay you dividends ‒ effectively your share of their profits.
The tax-free Dividend Allowance is set at £1,000 for this year.
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