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 2024:

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.

High Income Child Benefit payments

• Applies if one partner earns more than £50k with complete loss of Child Benefit payments at £60k.
• Individuals must notify HMRC and declare it on their tax return.
• from April the high income child benefit threshold is raised to £60,000. Whereas before it was £50,000, so individuals earning between £50-60k may find themselves now eligible to claim child benefit

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

• Dividend allowance reduces from £1k to £500 from 6^th April 2024.
• Unused allowances are lost.

Capital Gains Tax

• Annual exemption decreases from £6k to £3k starting 6^th April 2024.

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)

• Save up to £20k in a cash ISA or a Stocks and Shares ISA
• Up to £9k in a Junior ISA (for a child).

Pensions

• Annual pension contribution allowance of £60k per person.
• Unused allowances from 2020/21, 2021/22, 2022/23 can also be utilised until 5^th April 2024
• Unused allowance from 2020/21 will be lost after 6^th April 2024

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.

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.

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.