FINANCE
Azets Wealth Management gives its views on how to maximise allowances and tax breaks
Strategic tax planning
After an economically uncertain 2022 , SMEs and individuals will be looking to plan as best they can for the 2023 / 24 tax year .
A crucial part of this is considering allowances and whether there is also any scope to maximise tax breaks .
Chartered financial planner Jonathan Loughran ( pictured ), who works across Azets Wealth Management ’ s Teesside and Durham offices , talks through some considerations for both individuals and businesses before the tax year-end ...
Individual Savings Accounts ( ISAs ) It is recommended looking into ISA cash allowances or Stocks & Shares ISAs , as they allow the option to save £ 20,000 per tax year . If the allowance isn ’ t used , it is lost .
There ’ s also the option of Junior ISAs too , which can help any children who decide to go to university or buy a house in the future – these are now £ 9,000 each tax year , so have increased significantly over recent years .
There ’ s the less publicised Lifetime ISA , too , that can help with house purchases or retirement – this uses part of the ISA allowance .
Gift Aid Individuals can gift up to £ 3,000 of capital each year without attracting Inheritance Tax ( IHT ) – this can be increased to include last year ’ s too , if not used .
There are also other amounts that can be given away each year that don ’ t count towards this “ gift allowance ”, including wedding gifts and smaller sums .
Any excess income can be gifted to help with IHT planning , and this can be invested for the person receiving the gift . It ’ s important to note that gifts to charity help with tax planning as well , as Gift Aid is tax efficient .
Pensions Using pension payments can help reduce tax bills for higher-rate taxpayers . There ’ s an annual allowance of up to £ 40,000 , depending on circumstances .
A financial planner can help people work out their optimum contributions and whether they do have a full annual allowance . Even NHS and defined benefit pensions need to be considered here . Any unused allowances from the previous three years can be carried
forward , so if all allowances for the 2019 / 20 tax year haven ’ t been used , they ’ ll be lost on April 5 2023 . As noted , a specialist financial planner is able to work out what allowances people have left .
There are pensions for children too , making it possible to gift £ 3,600 gross per year (£ 2,880 after tax relief from income or capital ) to a pension . It ’ s worth thinking about if personal allowances are used to draw pensions , in order to save tax in the future .
Salary sacrifice If the employer allows salary sacrifice , there are national insurance savings to gain too . Some schemes allow people to change once a year , maybe in the new tax year .
High earners Some individuals are classed as high earners and may not be able to put their full £ 40,000 into a pension . Again , it ’ s important to check this . Higher earners may also want to think about tax-efficient investments such as enterprise investment schemes or venture capital trusts , but these are fairly specialist and not for everyone .
Shares If an individual has shares or is looking to sell , then straddling the tax over two years gives double the capital gains allowances . For the 2023 / 24 tax year this will be £ 6,000 , reducing to £ 3,000 in tax year 24 / 25 . As an alternative , it may also be beneficial to transfer some to a spouse to double up .
For those who are married , and where a spouse doesn ’ t use all of their personal allowance , it may be possible for basic rate taxpayers to claim some of this .
The dividend allowance for 23 / 24 tax year is £ 1,000 , which means people can receive this amount of dividends tax-free . Any bonus payments could be taxed differently , depending on the rates in the year . A business owner could pay before the tax year-end – it doesn ’ t matter when the company year-end is , personal income is tax year to tax year .
This is only a summary of some topics to think about . There are so many considerations around this complex area and it is always recommended that people speak to a specialist financial planner .
We are here to help Azets Wealth Management advises clients on their financial goals , including retirement planning , investment planning , tax planning , business protection , estate and protection planning and employee benefits .
The highly experienced team helps clients identify opportunities they may not know about , even those with a high level of financial awareness .
In the North-East , the firm has an experienced team of 14 independent financial planners , who are the local point of contact for wealth management services in Teesside , County Durham , Newcastle and the Tyne Valley .
To talk through any of these topics in more detail , or any other tax year-end considerations , please get in touch with a member of our team – hello @ azets . co . uk
The purpose of this article is to provide technical and generic information and should not be interpreted as a personal recommendation or advice . Tax planning and estate planning are not regulated by the Financial Conduct Authority .
Azets Wealth Management is a trading name of Azets Wealth Management Limited , which is authorised and regulated by the Financial Conduct Authority . Azets Wealth Management Limited is a subsidiary of Azets Holdings Limited .
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