As the tax year draws to a close, both individuals and businesses need to engage in diligent tax planning. By addressing essential tax matters in a timely and efficient manner, you can identify opportunities for savings and ensure compliance with HM Revenue and Customs (HMRC) regulations.
TPD Wealth Management, a Stockport-based financial planning firm, provides bespoke financial advice to individuals and businesses across the UK, focusing on tax-efficient strategies to make the most of available allowances and reliefs.
In this article, we present an array of essential tax year-end tips for individuals and businesses, covering crucial areas such as income tax, capital gains tax, inheritance tax, corporation tax, pensions, investments, and more. By implementing these tips under the expert guidance of TPD Wealth’s experienced financial advisers, you can optimise your financial planning, minimise tax liabilities, and lay the groundwork for a strong financial position in the upcoming tax year.
Income Tax Planning: Maximising Personal Allowances and Deductions
A well-thought-out income tax strategy can help individuals minimise their tax liabilities and maximise their take-home income. Consider the following tips to make the most of the UK’s available personal tax allowances and deductions:
- Utilise your personal allowance: For the 2023/2024 tax year, the UK personal allowance is set at £12,570, meaning you can earn up to this amount tax-free. Ensure you take full advantage of this allowance, along with any additional benefits, such as marriage allowance or blind person’s allowance if you qualify.
- Review your tax band: Confirm the accuracy of your tax band to avoid overpaying or underpaying your taxes. Discuss any discrepancies with HMRC or your financial adviser to make necessary adjustments.
- Plan to use tax-relief deductions: Review your tax reliefs, including contributions to pensions, charitable donations, and other qualifying expenses. Ensure that you have the necessary documentation to support these claims when filing your self-assessment tax return.
Capital Gains Tax (CGT) Efficiency: Utilising Allowances and Losses
Being conscious of your potential capital gains tax liabilities is crucial when disposing of assets, such as property or shares. Keep the following tips in mind to optimise your CGT planning:
- Utilise annual CGT allowance: In the 2023/2024 tax year, the annual allowance for CGT was £12,300 per individual. This is being reduced and this year is only £6,000. Next year, 2024/2025 it will be reduced further to £3,000. Dispose of assets strategically to maximise this allowance and minimise your chargeable gains within a tax year.
- Offset capital losses: If you incur losses on any investments, be sure to claim these against your capital gains to reduce your overall CGT liability. Losses can be carried forward to offset gains in future tax years if necessary.
- Transfer assets between spouses: Make use of the available tax-free transfer of assets between spouses or civil partners to minimise CGT liability. This can be particularly useful if one partner has a lower income and falls within a lower tax band.
Inheritance Tax (IHT) Planning: Protect Your Estate and Beneficiaries
A thorough inheritance tax plan is essential to minimise potential IHT costs for your beneficiaries. Consider the following strategies to safeguard your estate and loved ones:
- Utilise annual gift exemptions: Make the most of the £3,000 annual IHT gifting allowance, which allows you to give away assets or cash tax-free each year. This can help reduce the overall value of your estate, thus minimising the potential IHT liability.
- Establish trusts: Setting up trusts can be an effective way to manage your estate, providing tax-efficient solutions for passing on wealth to your beneficiaries. Consult your financial adviser to explore trust options and their IHT implications.
- Review your will regularly: Ensure your will is updated regularly to reflect any changes in your family and financial situation or any changes to the IHT rules.
Corporation Tax Strategies: Optimising Business Tax Planning
Business owners in the UK must comply with corporation tax regulations while seeking opportunities to minimise tax liability. Effective planning can help businesses achieve tax efficiency through the following methods:
- Claim available reliefs: Businesses in the UK can claim valuable tax reliefs such as research and development (R&D) tax credits, patent box relief, or capital allowances on investments in plant and machinery. Ensure your business takes advantage of the relevant reliefs to reduce its tax liability.
- Utilise losses: Businesses can carry forward trading losses to offset profits in subsequent accounting periods, which can help minimise corporation tax liabilities. Discuss your loss utilisation options with your financial adviser to ensure proper implementation.
- Manage timing of dividend payments: To benefit shareholders and optimise taxation, businesses should consider the optimal timing for dividend payments. Aligning these payments with the tax year-end can impact both corporation tax and shareholders’ personal tax liabilities.
Pensions and Investments: Preparing for the Future with Tax-Efficient Strategies
Strategic pension and investment planning is essential to secure your financial future while minimising your tax liabilities. Keep the following tips in mind when managing your long-term savings:
- Maximise pension contributions: Tax relief on pension contributions is one of the most attractive benefits of pension saving. Contribute up to the allowable limits to claim tax relief based on your income tax band.
- Utilise your ISA allowance: Individual Savings Accounts (ISAs) offer tax-free growth and interest from investments, making them an attractive savings option. For the 2023/2024 tax year, the ISA allowance is set at £20,000 per individual. Invest strategically to maximise your tax-efficient savings.
- Review your investment portfolio: With market fluctuations and changes in tax laws, it is prudent to review and rebalance your investment portfolio regularly. Consult your financial adviser to ensure your investments align with your financial goals and risk tolerance.
Stay Tax-Efficient with Expert Guidance from TPD Wealth Management
As the tax year draws to a close, it’s crucial for both individuals and businesses to effectively manage their finances and minimise tax liabilities with precise planning. With the support of TPD Wealth’s experienced financial advisers, you can create tax-efficient strategies that ensure compliance with HMRC regulations while maximising the potential for financial growth.
Whether you need assistance with income tax, capital gains tax, inheritance tax, corporation tax, or pension and investment planning, TPD Wealth Management is committed to providing you with the bespoke advice you need.
Contact us today to discuss our financial planning services and discover tailored solutions that make the most of available tax reliefs and allowances, ensuring a strong financial position in the new tax year.
