Tax Year End 2023/2024: Essential Reminders
As the 2023/2024 tax year draws to a close on 5 April 2024, it’s crucial to review your financial situation and take advantage of any tax-saving opportunities. Here are some essential reminders to consider before the tax year ends.
Don’t Miss Out on Your 2019/2020 Tax Rebate
If you have purchased things you need for your job and your employer has not re-imbursed you for these expenses, you may be able to claim tax relief on these expenses for the current tax year and the previous four tax years. However, after 6 April 2024, you will lose the ability to claim for any allowable employment expenses incurred between 6 April 2019 and 5 April 2020. Don’t let this opportunity slip away – file your claim as soon as possible. Note that for employment expenses to qualify for tax relief, you must have incurred them wholly, exclusively, and necessarily in the performance of the duties of the employment.
Maximise Your ISA Allowance
Individual Savings Accounts (ISAs) offer a tax-efficient way to save and invest. For the 2023/2024 tax year, you can contribute up to £20,000 across cash ISAs, stocks and shares ISAs, or Lifetime ISAs. Any income from interest, dividends, or capital gains within an ISA will be tax-free. With upcoming changes that will reduce the tax-free dividend allowance and the tax-free allowance for Capital Gains Tax, utilising ISAs becomes even more crucial. Contribute to your ISA before 5 April 2024 to take advantage of the current year’s allowance.
Additionally, don’t forget about Junior ISAs for your children. They have a £9,000 allowance each tax year to start building their savings and investments.
Consider the Lifetime ISA (LISA)
The Lifetime ISA (LISA) is an excellent option for those planning for their first home or retirement. You can put in up to £4,000 each year, until you’re 50. You must make your first payment into your ISA before you’re 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. The yearly Lifetime ISA limit of £4,000 counts towards your annual ISA limit.
Utilise the Capital Gains Tax (CGT) Annual Exemption and Dividend Allowance
The CGT Annual Exemption for the 2023/2024 tax year was cut to £6,000 and will further decrease to £3,000 from 6 April 2024. If you have an asset with a capital gain that will be subject to CGT, consider selling it (or a portion of it, if possible) before 6 April 2024, to utilise the higher exemption. Keep in mind that many assets are not liable for CGT, such as shares held within ISAs, and you should only sell an asset if it aligns with your financial goals.
Similarly, the Dividend Allowance was reduced to £1,000 for the 2023/2024 tax year and will decrease further to £500 from 6 April 2024. If you operate a company or have control over dividend payments, you may wish to pay out dividends to utilise the higher allowance before it decreases.
Don’t Forget the Inheritance Tax Annual Exemption
If you’re considering the Inheritance Tax liabilities your loved ones may face, make sure to utilise your yearly annual exemption of £3,000. You can also use the Annual Exemption from the previous tax year if you didn’t use it.
By taking these steps before the tax year ends, you can potentially save on taxes and make the most of the available allowances and exemptions. However, it’s essential to seek professional advice to ensure you’re making informed decisions that align with your specific financial situation.
For more information contact Ballards LLP at 01905 794 504
Disclaimer. This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.
