End of tax year planning

As we approach the end of the tax year, there are a few things to consider before the start of the new tax year on 6^th April 2025:

Marriage allowances

This can be backdated 4 years, potentially saving £252 a year in tax if you qualify.
It applies where one partner earns below the income tax personal allowance and the other pays basic-rate income tax. The application needs to be made by the non-taxpayer.

High Income Child Benefit payments

Applies if one partner earns more than £60k with complete loss of Child Benefit payments at £80k.
Individuals must notify HMRC and declare it on their tax return.

Tax free childcare

Offers you up to £2k towards your childcare costs per year.
Eligibility is lost when one parent’s income is above £100k and lasts until the child turns 11 (or 16 if disabled).

Dividends

Tax free dividend allowance is £500.
Unused allowances are lost.

Savings

There is a tax-free allowance available for savings income up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.

Capital Gains Tax (CGT)

Annual exemption of £3,000 available per person.
Basic rate taxpayers pay CGT at 18% and higher/additional rate pay at 24%.
Cryptocurrencies fall under the CGT regime – whether you trade one cryptocurrency for another or convert into pounds sterling.

Assets held jointly

Where assets are held jointly between spouses, each spouse has an annual exemption.
It is assumed that income is shared equally for tax purposes between spouses – this can be amended by making a Form 17 declaration of beneficial interests in joint property and income to HMRC.

Business Asset Disposal Relief (BADR)

Where a business of business asset is sold, BADR may apply. The CGT charged on this will increase from 10% to 14% from 6 April 2025 and again to 18% from 6 April 2026.
There is a lifetime limit of £1m per person and applies to sole traders, partnerships, limited companies, joint ventures and trusts.

Rent a room relief

Renting a room out in your main residence is tax-free up to £7,500 a year.

Individual Savings Accounts (ISAs)

Income and Capital Gains in an ISA are exempt from taxation.
Save up to £20k in a cash ISA, Stocks and Shares ISA, Flexible ISA or Innovative ISA.
Save up to £4k in a Lifetime ISA
Up to £9k in a Junior ISA (for a child).

Pensions

Annual pension contribution allowance of £60k per person.
Unused allowances from 2021/22, 2022/23, 2023/24 can also be utilised until 5^th April 2025
Unused allowance from 2021/22 will be lost after 5^th April 2025

State pension eligibility

Ensure your NIC contribution record is sufficient to qualify for a state pension
Can be checked via HMRC’s website – voluntary contributions can be made to fill any gaps.
5^th April 2025 is the last chance to fill any gaps in your National Insurance record from 2006 to 2018. From 6^th April 2025, you will only be able to go back 6 years.

Enterprise Investment Schemes (EIS) / Seed Enterprise investment Schemes (SEIS) / Venture Capital Trusts (VCTs)

Consider investing in these schemes for potential tax relief up to 50% of the investment.

Remuneration planning

Higher rate/additional rate taxpayers may find it more tax-efficient to restructure remuneration from dividends to PAYE due to the marginal increase in corporation tax up to 25% and the 2% drop in NICs.

Stamp Duty Land Tax (SDLT)

SDLT changes from 1^st April 2025 – below are the current rates and the new rates

SDLT rates to 31 March 2025
SDLT rate	Existing homeowner charge band	First time buyer charge band
0%	Up to £250,000	Up to £425,000
5%	£250,001 – £925,000	£425,001 – £625,000
10%	£925,001 – £1.5m
12%	+£1.5m

SDLT rates from 1 April 2025
SDLT rate	Existing homeowner charge band	First time buyer charge band
0%	Up to £125,000	Up to £300,000
2%	£125,001 – £250,000
5%	£250,001 – £925,000	£300,001 – £500,000
10%	£925,001 – £1.5m
12%	+£1.5m

If you want advice or assistance with any of the above points, please feel free to get in touch with your main point of contact at Sterling Accounting Solutions.