With the end of the financial year drawing close, now is the time to evaluate your tax position for the year to 5 April 2023 to ensure that you have taken all steps to optimise your situation.
In the lead up to 5 April, our Private Client Taxperts have put together a brief summary of points you should consider with detailed factsheets that you can download on each point. Take a look at some of our tax planning tips below:
- Have you considered making a pension contribution in the year? Individuals can currently pay up to £40,000 gross each tax year (£32,000 net payment) which can help reduce your exposure to higher rate tax and provide funds for future retirement. This will be increased to £60,000 from 6 April 2023. Download our pension factsheet for more detail.
- Gift Aid payments that you make in a tax year not only help the charity, but they can help to reduce your higher rate tax exposure. A Gift Aid payment will extend your basic rate tax band in the same way as a pension contribution. Download our Gift Aid factsheet for more detail.
- If you operate an owner managed private company, you can utilise the £2,000 tax free dividend allowance. As dividends are taxed based on the UK tax bands, have you considered taking an additional dividend from your company to maximise this limit? (UK tax payers have a basic rate band £6,608 higher than Scottish tax payers.) Download our dividend planning and corporate salaries factsheet for more detail.
- The Capital Gains Tax annual exemption for 2022/23 is £12,300, if you have a share portfolio with unrealised gains then you should look to utilise this. Consideration should also be given to inter spouse transfers to utilise their annual exemption as well. Download our capital gains planning factsheet for more detail.
- You can invest £20,000 into an ISA in each tax year, future income and capital gains within the ISA are tax free. Download our ISA and tax efficient investments factsheet for more detail.
- Have you considered utilising your Inheritance Tax annual exemptions to make gifts of capital? The first £3,000 of gifts in any tax year are completely out with your estate. You can also consider making capital gifts out of excess income on an annual basis. Download our inheritance tax gifting factsheet for more detail.
The above is by no means an exhaustive list of the tax planning opportunities that you should consider ahead of the new tax year. If you would like more information or advice regarding your tax position, please contact our Private Client Taxperts today via taxation@eqaccountants.co.uk or by calling one of our offices.