Year End Tax Planning – Maximise Your Savings Before the Tax Year Ends!

19 March 2024

The clock is ticking! With the April 5th tax deadline approaching, it’s prime time to ensure your business and family finances are in tip-top shape.

While tax rates and thresholds may be holding steady, there are still plenty of smart strategies to minimise your tax burden. We’ll explore some key options to help you maximise your savings this year.

Imagine having the power to choose when you pay taxes. Believe it or not, that’s possible for some income sources! By planning ahead before April 5th, you could significantly reduce your tax burden by strategically shifting income to this or the next tax year.

While the recent Autumn Statement might not have been packed with surprises, some important tax changes are just around the corner. These include:

  • A decrease in the capital gains tax annual exempt amount
  • A further reduction in the Dividend Allowance
  • The introduction of basis period reform for unincorporated businesses

These changes can impact your taxes, so incorporating them into your year-end review is crucial.

Note: This article uses the rates and allowances for 2023/24. “Spouse” refers to both spouses and registered civil partners.

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Year-End Tax Planning: A Roadmap to Optimising Your Finances

Let’s delve deeper into specific areas where you can optimise your tax position for the year ahead:

  1. Understanding the Tax Landscape: We’ll break down the latest tax rates and allowances to ensure you’re fully informed.
  2. Tax and the Family: Discover how to minimise tax implications for your entire family.
  3. Family Companies: We’ll guide you in strategising profit extraction from your family company.
  4. Pension Planning: Stay on top of the latest pension planning opportunities to secure your future.
  5. Unincorporated Businesses: Prepare for major changes impacting your business with practical advice.
  6. Tax-Efficient Investments: We’ll share tips on investing while minimising tax burdens.
  7. Capital Gains Tax: Get a clear picture of the current rules and changes affecting your capital gains.
  8. Maximising Gift Aid: Learn how to effectively utilise Gift Aid and maximise charitable giving.

By exploring these key areas, you’ll gain the knowledge and tools to make informed decisions and optimise your tax planning strategy for the year ahead.

We’ve created a FREE downloadable checklist to simplify the process! Download your Year-End Tax Planning Checklist here and use it as a worksheet to ensure you’re claiming all the deductions and credits you’re entitled to. 

1. Understanding the Tax Landscape

Income tax rates and bands for 2023/24 are determined by where in the UK you live and what type of income you have.

Rates and bands: English, Welsh and Northern Irish taxpayers 2023/24

Taxable incomeNon-savings and savings income rateDividend rate
£0 to £37,70020%8.75%
£37,701 to £125,14040%33.75%
Above £125,14045%39.35%

Taxable income is income in excess of the personal allowance. Non-savings income is broadly earnings, pensions, trading profits and property income. The tax rates are different for Scottish taxpayers.

The personal tax allowance

Think of the personal allowance as a tax-free zone in your income. It’s the first chunk of money you earn each year that the government doesn’t take a bite out of. In 2023/24, that zone is a generous £12,570, meaning you can keep this much without paying income tax.

This allowance can be even higher if you’re eligible for the Blind Person’s Allowance. However, it’s not a one-size-fits-all deal. For high earners, the zone starts to shrink. If your income exceeds £100,000, your allowance gets smaller by £1 for every £2 you earn above that limit. By the time you reach £125,140 or more, the zone disappears entirely.

But here’s the good news: with careful planning, you may be able to delay this shrinking or even keep your full allowance in some cases.

Tip: Can you retain the personal allowance?

Adjusted net income, broadly speaking, is total taxable income before personal allowances but after some deductions such as pension contributions and Gift Aid. If you are in the £100,000 to £125,140 income bracket, additional pension contributions or payments under Gift Aid can help preserve the personal allowance.

The savings and dividend allowances
Savings and dividend allowances

In some circumstances, you may be eligible for the Savings Allowance, which allows your savings income to be taxed at 0% within the allowance. The amount of the allowance depends on your highest tax rate. If you are a basic rate taxpayer, then your Savings Allowance is £1,000. If you are a higher-rate taxpayer, your Savings Allowance is £500. However, if you are an additional rate taxpayer, you won’t receive the Savings Allowance. The Dividend Allowance, on the other hand, is available to all taxpayers regardless of their tax rate. The first £1,000 of dividends are charged at 0% tax.

Savings and dividends received above these allowances are taxed at the rates shown in the table. Savings and dividends within the Savings Allowance or Dividend Allowance still count towards an individual’s basic or higher rate band. They may thus impact the rate of tax payable on income in excess of the allowances.

Some taxpayers may also be entitled to the starting rate for savings. This taxes £5,000 of interest income at 0%. This rate is not available if non-savings income is more than £5,000. 

Tip: Dividend Allowance is more generous before April 2024

The tax-free allowance for dividends is dropping to £500 starting April 6th, 2024. However, there’s still a chance to maximise your savings this tax year.

If you receive dividends before April 6th, 2024, you can still benefit from the higher allowance of £1,000 for the 2023/24 tax year. So, if you’re expecting any dividend payments, consider timing them strategically to take advantage of this temporary advantage.

2. Tax and the Family

Tax and the Family

Make full use of bands and allowances

While both married couples and civil partners are taxed individually, there are clever ways to work together and maximise your combined tax benefits.

Sharing the Allowance Pie:

  • Each partner has their own personal allowance – the amount you can earn tax-free.
  • The married couple’s allowance, however, is only available if one partner was born before April 6th, 1935. This allows you to transfer a portion of your personal allowance to your partner if they earn less, potentially reducing their tax bill.
  • The newer marriage allowance allows you to transfer £1,260 of your personal allowance to your partner if their income falls below a certain threshold. This can be a great way for a couple to save on taxes.

Optimising Income Distribution:

The key lies in distributing income strategically to take advantage of lower tax bands. If you both have different incomes:

  • Utilise the lower earner’s full personal allowance first, maximising their tax-free earnings.
  • Shift income-producing assets like property or investments to the lower earner, potentially lowering their overall tax burden. Remember, any such transfers must be genuine gifts with no strings attached, and you should consult with us before making any changes to ensure everything is done correctly.

Children as Independent Taxpayers:

While not the focus of this section, it’s important to note that children are treated separately for tax purposes. They have their own:

  • Personal allowance
  • Annual capital gains tax exemption
  • Basic rate tax band and savings band

By understanding these rules and working together strategically, married couples and civil partners can optimise their tax situation and potentially save a significant amount of money. 

Tip: who should help?

From a tax point of view, it is usually more efficient for grandparents, rather than parents, to provide funds for investment for under-age children.

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Involve family in the business

Involving family members in your company or unincorporated business can be a win-win. It’s not just about keeping things close to home; it can also offer strategic tax benefits.

Multiplying your opportunities:

Consider this scenario: You strategically involve your family in your business, unlocking more options for extracting profits. This could be particularly beneficial if, for instance, your spouse or child doesn’t fully utilise their personal allowance. By involving them in the business and paying them a salary, you could potentially reduce your overall tax burden.

It’s crucial to remember that involving family members should be a genuine business decision. They must actively contribute to the business operations, and you should be able to demonstrate their involvement. Their remuneration, whether salary or other forms of compensation, should be fair and justifiable based on their role and workload. Any excessive payments, as determined by HMRC, could be subject to challenge.

Tip: pension planning in family companies

Director-shareholders can significantly grow their pension and reduce company tax through deductible pension contributions. This applies to spouses employed by the company, too, but ensure your remuneration package is justified. Consult a professional to maximise these benefits.

Note new CGT rules for separating couples

Divorces and separations are already emotionally taxing, but the added complexities of transferring assets can feel overwhelming. Fortunately, recent changes offer some breathing room for formerly married couples navigating this process.

Previously, tax-free asset transfers between spouses were only possible until the end of the separation year. This meant rushing through decisions that could have long-term financial consequences.

Here’s the good news:

  • As of April 6th, 2023, couples have up to three years after separation to transfer assets between them without incurring capital gains tax.
  • If the transfer is part of a formal divorce agreement, there’s no time limit.

This means you can take the time needed to carefully consider each asset and its future ownership in a stress-free way.

Important Note: Special rules apply when one spouse retains a financial interest in the former family home after separation. Be sure to consult a qualified professional to ensure you navigate these situations smoothly.

Watch for Child Benefit charge

Are you familiar with the High Income Child Benefit Charge (HICBC)? It’s a financial concept that can have a significant impact on many families, often coming as a surprise. Let’s delve into it:

  • Who’s affected? Couples where one partner gets Child Benefit and either partner (or both) earns over £50,000 (including your live-in partner, spouse, or civil partner).
  • The Taxman’s Bite: The HICBC gradually reduces your Child Benefit starting at £50,000 and fully cancels it out by £60,000. Think of it as a sliding scale!
  • Self-Assessment Surprise: Unlike most taxes, this one requires manual registration for Self-Assessment. Don’t wait for HMRC to knock – if your income crosses the £50,000 mark, be proactive and notify them to avoid any penalties.

The good news? The government plans to simplify the HICBC in the future, but for now, staying informed means keeping your hard-earned Child Benefit!

3. Family Companies

Tax and Family Companies

The winds of change are blowing for director-shareholders in family businesses! Recent shifts, like adjustments to the Dividend Allowance and National Insurance (NICs) rates, coupled with the possibility of higher corporation tax, could mean it’s time to rethink your remuneration strategy.

Why the sudden shift? The tax environment is evolving, and what worked in the past might not be optimal today. Running the numbers specific to your unique situation is crucial. This is where consulting your accountant, with their deep understanding of the changing tax landscape, can be incredibly valuable. They can help you navigate these changes and optimise your tax position to ensure your family business continues to thrive.

Corporation Tax

Taxes can feel like a burden, but they can also be an opportunity for savvy businesses. Here’s the lowdown on corporation tax rates:

  • Profits under £50,000? You get a 19% tax rate.
  • Profits soaring above £250,000? The standard 25% rate applies.

Stuck in the middle? There’s marginal relief. This acts like a sliding scale, gradually increasing your tax rate as your profits climb towards the higher bracket.

So, what does this mean for you?

The current tax landscape might prompt you to rethink your profit extraction strategy. Is it time to reinvest in growth? Perhaps reward your team with bonuses? We can help you navigate these options and maximise your post-tax profits.

Tax efficient remuneration

Many businesses’ traditional remuneration strategy typically involves taking a modest salary and then distributing the remaining profits as dividends. This approach has been around for quite some time, and while it has its benefits, it may not always be the most effective way to remunerate.

Salary: You want to ensure you qualify for state benefits like the State Pension but do not trigger National Insurance Contributions (NICs), which can add unnecessary costs. The good news is that your salary counts as a deductible expense for the company, reducing your corporation tax bill.

Here’s the intriguing part: As a director (without a worker’s contract), you’re not bound by minimum wage hourly rates like full-time employees. This unique position allows for strategic planning, a benefit that can significantly impact your financial situation.

The ‘magic number’ for 2023/24 is £12,570. This figure is crucial as it allows you to fully utilise the standard personal allowance and effectively minimise your tax burden. However, navigating NICs can be more complex. While employer NICs start at £9,100, employee NICs come into play above £12,570, with an additional levy at higher earning brackets.

If you feel overwhelmed by these calculations’ intricacies, we can help you find the ideal salary level that optimises your personal benefits while keeping your company tax-efficient.

Dividends: Dividend payouts used to be a favourite tool for family businesses to extract profits. But the tide is turning! With the Dividend Allowance shrinking and tax rates on dividends rising, this method is becoming more expensive.

Does this mean it’s time to ditch dividends altogether? Not necessarily. In many cases, taking profits as dividends compared to salary can still be tax-efficient. However, the decision requires careful planning.

Bonus: Bonuses can be a valuable tool for profit extraction, especially when:

  • Retained profits are limited: If your company hasn’t generated enough retained profits to pay dividends at the desired level, a bonus can provide an alternative route to access those profits.
  • High corporation tax rate: Operating under the full corporation tax rate makes bonuses more attractive due to their tax efficiency.

Similar to salaries, bonuses are subject to income tax and national insurance contributions (NICs) for you and employer NICs for the company. However, there’s some good news! The recent reduction in employee Class 1 NICs from 12% to 10% (effective April 2024) makes bonuses even more cost-effective. Remember: For the 2023/24 tax year, you’ll pay a blended rate of 11.5% on employee NICs.

The timing of bonuses can be strategically leveraged. Bonuses can be decided after the year-end for corporation tax purposes, once final results are clear. As long as they’re paid within nine months, they can still be deducted in that tax year. Income tax offers similar flexibility. Depending on how and when the bonus is declared, you might be able to defer taxation into the next year or include it in the current one.

Navigating the timing and procedures for bonuses can be tricky. Seeking professional advice ensures you maximise the benefits while ensuring everything is done correctly. We can guide you through this process and tailor a strategy that best suits your family business’s needs.

Consider how to deal with directors’ loans

It is common for director-shareholders in family companies to have a loan account with the company. As most family companies are what are technically called ‘close companies’, this brings them within scope of the ‘loans to participator’ rules. This can mean a charge to corporation tax, often known as a s455 charge, if a director’s loan account is unpaid nine months after the end of the accounting period. For loans made on or after 6 April 2022, the charge is 33.75%.

Please do talk to us about the options for dealing with a director’s loan in your circumstances.

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4. Pension Planning

The world of pensions has undergone significant changes in 2023, particularly impacting high earners and those over 50. Here’s a breakdown of the key updates:

  • Saving More, Taxing Less: Good news! The Annual Allowance (AA), the maximum amount you can contribute to your pension with tax relief, has increased to £60,000 (up from £40,000). This allows you to save more for retirement while enjoying tax benefits.
  • Changes for High Earners: High earners with an adjusted income exceeding £260,000 will face a tapered AA. This means their maximum tax-relieved contribution will gradually decrease until it reaches a minimum of £10,000 (increased from £4,000).
  • Important Note for Over-50s: If you’ve accessed a defined contribution pension flexibly, your Money Purchase Annual Allowance is £10,000.
  • Goodbye Lifetime Allowance Charge: Previously, the Lifetime Allowance (LTA) capped your total tax-relieved pension savings. This cap has been abolished, giving you more flexibility in accumulating your retirement nest egg. Excess lump sums above the LTA will now be taxed at your marginal income tax rate (instead of the previous 55% charge).
  • Increased Tax-Free Lump Sum: The Pension Commencement Lump Sum (the initial tax-free payment you can receive) has risen to £268,275 (exceptions may apply).
Pension Planning

While these changes are positive, navigating the tax implications for high earners remains complex. We recommend seeking personalised advice.

Pension contributions remain a highly tax-efficient way to invest for your retirement. Whether you’re a director-shareholder, self-employed, or a business partner, let’s discuss optimising your pension strategy.

5. Unincorporated Businesses

Basis period reform

From April 6th, 2024, how unincorporated businesses (sole traders and partnerships) handle their taxes is changing. This reform, called “basis period reform,” means your business will be taxed on the profits you make in a tax year (April 6th to the following April 5th) rather than when your accounting year ends.

Who’s affected? Don’t worry if your accounting year ends on March 31st or April 5th. You’re good to go! This change only impacts businesses with different year-ends.

Why the change? This reform aims to streamline the tax system and work better with the upcoming Making Tax Digital program. It should lead to a smoother digital tax experience in the long run.

Short-term impact: In the first year (2023/24), this change might mean a higher tax bill for some businesses. For those with non-standard year-ends, your tax calculation will be based on a longer period than usual. There are ways to minimise the impact, like “overlap relief” (if applicable) and spreading the extra profits over several years.

The bottom line: Be prepared for potentially higher tax bills in the next few years and the need to adjust your year-end accounts and tax return processes. Talking to your accountant about how this change affects your specific business is highly recommended.

Tip: planning to minimise impact

The upcoming basis period reform for unincorporated businesses brings new considerations. While some businesses can simply change their accounting year-end to March 31st, this isn’t a one-size-fits-all solution.

Seasonal businesses, for example, might find their income heavily skewed towards a specific period. Likewise, large professional partnerships with international reporting requirements may have limitations on changing their year-end date.

The impact of this reform will vary depending on your unique circumstances. Here’s how we can help:

  • Cash Flow Assessment: We’ll analyse your business’s potential cash flow implications of basis period reform.
  • Tax Band Optimisation: We’ll assess the possibility of being pushed into higher income tax brackets by the reform and suggest strategies to mitigate this.
  • Damage Limitation Strategies: If needed, we’ll work with you to develop strategies to minimise the reform’s potential negative impacts on your business.

Contact us today to take stock of your situation and ensure a smooth transition under the new basis period reform.

6. Tax-Efficient Investments

Tax Efficient Investments

Individual Savings Accounts: act by 5 April

Looking for a way to make your money work harder for you, tax-free? Look no further than Individual Savings Accounts (ISAs)! ISAs offer a fantastic opportunity to grow your savings without the burden of income tax or capital gains tax. Plus, unlike some other allowances, using an ISA won’t affect your Savings or Dividend Allowances.

While the contribution limits haven’t changed this year, the tax benefits remain highly attractive. There are four different ISA types to choose from, depending on your goals:

  • Cash ISAs: Perfect for those seeking easy access to their savings and a steady return.
  • Stocks and Shares ISAs: Ideal for those comfortable with a bit more risk, offering the potential for higher growth within the ISA wrapper.
  • Innovative Finance ISAs: Invest in peer-to-peer lending or other innovative financial products within a tax-efficient environment.
  • Lifetime ISAs: A unique option for first-time homebuyers or those saving for later life. The government even sweetens the deal by adding a 25% bonus to your contributions (up to £1,000 per year)!

Keep in mind that there are some limitations with Lifetime ISAs. Contributions stop at age 50, and withdrawals before age 60 or for reasons other than buying a first home or terminal illness come with a 25% withdrawal charge.

The key takeaway? ISAs offer a powerful way to boost your savings with significant tax advantages. But remember, the deadline to contribute for the current tax year is April 5th, so make sure to take advantage of it! Talk to your accountant today to explore which ISA type best suits your needs.

Rules and changes

Here’s a breakdown of the latest changes and what they mean for you:

How Much Can You Invest?

The government sets a limit on how much you can invest in an ISA each year. Luckily, this hasn’t changed recently:

  • Junior ISA: £9,000 for children under 18
  • Adult ISA: £20,000 per person (combined across all ISA types)

From April 2024, you’ll have more freedom to manage your ISAs. You’ll be able to open multiple ISAs of the same type within the year as long as you stay within your overall £20,000 limit. This applies to all ISA types except the Lifetime ISA, which remains capped at £4,000 per year.

Who Can Open an ISA?

Anyone over 18 and resident in the UK can open an ISA. There are a few exceptions, but generally, most adults can participate. The age limit for Cash ISAs is increasing from 16 to 18 starting in April 2024.

Important Notes:

  • You cannot hold a joint ISA with your spouse, but you each have individual limits. So, a household can potentially save up to £40,000 per year combined.
  • You can’t manage an ISA for someone else directly, but if they lack the mental capacity, you can apply for a financial deputyship order to manage one for them.

Tip: Act before 5 April 2024

We recommend taking stock of your position before 5 April 2024. ISA limits can’t be carried forward into future years and are lost if not used in the tax year.

Consider the venture capital schemes

Have you ever considered backing the next big thing? Young, innovative companies often struggle to access traditional funding, but thanks to generous government incentives, you can become a vital investor while reaping significant tax benefits.

Enter Venture Capital Schemes (VCS), a powerful tool for investors and businesses. Through three key schemes: the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs), you can support exciting new companies not listed on stock exchanges.

The good news? These schemes are here to stay! Recent legislation extended the tax reliefs until April 2035, giving you ample time to invest and benefit.

So, what’s in it for you? The potential tax relief is substantial. With SEIS, you could invest up to £200,000 annually and receive a whopping 50% income tax relief. Plus, if you hold the shares for over three years and sell them at a gain, you’ll pay zero capital gains tax. EIS and VCTs also offer attractive income tax relief of 30% on your investment, alongside favourable capital gains treatment.

Of course, there’s more to the story. This is just a high-level overview; the specific rules require close attention. However, the potential rewards are undeniable.

Contact us today for a detailed discussion and discover how you can support innovation while maximising your tax benefits.

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7. Capital Gains Tax

Capital gains tax (CGT) is charged at 10% (18% on residential property) for UK basic rate taxpayers and 20% (28% on residential property) for UK higher and additional rate taxpayers.

Maximise Your Capital Gains Tax Exemption

The Autumn Statement 2022 brought a surprise for capital gains tax: the annual exemption is dropping! As of April 6th, 2024, you’ll only be able to pocket gains of up to £3,000 before paying capital gains tax (CGT). This change means CGT will impact more people than ever.

But fear not! There are still ways to optimise your situation. Here’s a key strategy:

  • Couples Advantage: Did you know each person has their own annual exemption? That means couples can effectively double their tax-free allowance. Consider strategically transferring assets between spouses (remember, this only applies to married couples, not cohabiting ones) to ensure both partners fully utilise their exemption.
  • Tax Rate Trick: This transfer can be particularly beneficial if one spouse is a higher-rate taxpayer while the other has unused basic rate allowance. By transferring assets, you could potentially access the lower 10% tax rate instead of the 20% rate.
  • Reduced Rate for Property: In a positive development announced during the Spring Budget 2024, the government will reduce the higher rate of Capital Gains Tax (CGT) due on sales of residential property from 28% to 24% from 6 April 2024.

Important Note: Any asset transfer must be outright and unconditional to be effective for tax purposes. Talk to us before making any transfers to ensure they are done correctly and maximise your tax savings.

By utilising strategies like these, you can still make the most of the annual exemption, even with the upcoming reduction. Remember, a little planning goes a long way in keeping more of your hard-earned gains!

Review position for family home

If you sell a home that has always been your main or only residence for all the time that you have owned it, any gain should be covered by CGT Private Residence Relief (PRR).

However, things can get a bit tricky if your situation isn’t straightforward. Let’s delve into some key points to consider:

  • Qualifying for PRR:  Generally, PRR applies if you’ve always used the property as your main or only residence throughout your ownership. This means it wasn’t rented out, no part used solely for business, the grounds aren’t excessively large, and it wasn’t bought purely for profit.
  • Selling Delays and Complications:  Life throws curveballs sometimes. Delays in selling might involve renting out the property or buying another one before selling the first. These scenarios can quickly complicate your CGT situation.
  • Reduced “Final Period Exemption”:  Recent changes have shrunk the “final period exemption” window. This exemption allows PRR even if you’re not living in the property during a specific timeframe. For properties sold before April 2020, it covered the final 18 months. Now, it’s only nine months. Exceptions exist for disabilities or long-term care, extending the exemption to 36 months.
  • HMRC Scrutiny:  Be aware that the taxman (HMRC) might occasionally challenge PRR availability. “Residence” isn’t strictly defined by law. HMRC goes beyond just looking at occupation length. They assess factors like “permanence, continuity, and expectation of continuity” to establish a dwelling’s use as a residence. The “quality” of occupation is important, looking at things like having meals, doing laundry, and spending leisure time at the property.

Understanding these key points allows you to navigate the potential complexities of selling your family home and maximise your CGT benefits. Consulting a tax advisor is always recommended for personalised guidance on your specific situation.

Tip: More than one home?

Married couples can only count one property as their main residence for CGT purposes. This can be problematic if both parties are homeowners. In this situation, it’s possible to decide which of the two properties you wish to nominate as your main residence and notify HMRC of this. We can advise further.

Be aware of rules on cryptoassets

Cryptoassets and tax

Cryptocurrency is a rapidly evolving landscape, and so is how the government taxes it. Here’s a heads-up for anyone dealing in cryptoassets: HMRC is getting serious about tracking down income and gains.

The upcoming tax year (2024/25) brings a change to the self-assessment tax return. Be prepared for specific questions about your crypto transactions on the capital gains tax pages. This is a clear sign that HMRC is actively looking for cryptocurrency activity.

Remember, buying and selling cryptoassets typically falls under the Capital Gains Tax (CGT) regime. With the annual CGT exemption decreasing, keeping track of your crypto transactions is more important than ever. Monitoring your activity helps ensure you stay compliant and avoid any surprises come tax time.

Latest developments

HMRC has a new service for those who have dabbled in cryptocurrency and forgotten to mention it on their tax return. This applies to any income or gains you made from cryptoassets like Bitcoin, NFTs, or utility tokens.

Consider it a chance to get your crypto tax affairs in order. Have you bought and sold crypto in the past but not declared any capital gains? This service is your opportunity to come clean and avoid potential penalties.

While this service allows for voluntary disclosure, we always recommend seeking professional advice before using it.

8. Maximising Gift Aid

Did you know your charitable giving can benefit your favourite causes and your tax situation? Gift Aid is a fantastic scheme that boosts donations to charities and Community Amateur Sports Clubs (CASCs) while potentially reducing your taxable income.

Lower Your Taxable Income

Donations under Gift Aid can help you stay below key thresholds, saving you money. This is particularly helpful if your income is close to the thresholds for:

  • High-Income Child Benefit Charge
  • Abatement of personal allowance
  • Additional rate threshold (England, Wales, and Northern Ireland)

Maximise Relief with Timing

For uneven income situations, you can potentially claim tax relief in the previous year through a “carry back election.” However, strict deadlines and procedures apply.

Tip: paying tax at more than basic rate?

Are you paying tax at a higher rate? Gift Aid can trigger a tax refund, as you’ll get the difference between basic and higher-rate tax on your donation.

Important Note: As of April 5th, 2024, Gift Aid tax relief will only apply to UK charities and CASCs. You may need to adjust your giving plans if you previously supported EU/EEA charities.

Don’t miss out! Gift Aid is a powerful tool for supporting good causes and making your money work harder. We’re here to help you navigate the process and maximise the benefits. Contact us today to discuss your charitable giving strategy.

By exploring these key areas and consulting with a professional, you can make informed decisions and optimise your tax planning strategy for the year ahead. Take advantage of these opportunities to maximise your savings before the April 5th tax deadline!

BONUS: Take advantage of valuable tax savings! Download your FREE Year-End Tax Planning Checklist today and ensure you’re taking advantage of all the available tax-minimising strategies. By referencing this checklist, you’ll be empowered to navigate the complexities of tax planning and make informed decisions that maximise your financial benefits.

Take action today! Schedule a consultation with one of our experts to ensure you’re taking full advantage of all available tax benefits.

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Author
Jenny Sharma FCCA CTA,Senior Tax Manager
Maximise Your Savings Before the Tax Year Ends!

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