With the 2024/25 tax year-end fast approaching (5th April) the sands of time are ticking by. Here are Rogers Spencer’s 5 top tips for pre-year-end tax planning.
1. Make Pension Contributions
Perhaps the most powerful and easiest way to reduce your tax bill is to pay into your pension. Whether you are making personal contributions, or your company makes employer contributions; these contributions can whittle down your taxable income.
Personal contributions attract tax relief paid directly into your pension scheme and company contributions reduce taxable profits for corporation tax.
If you’re a higher rate taxpayer, the contributions are even more tax efficient as you will be able to save a further 20% on top of the relief at source on any contribution.
If you receive child benefit, but earnt over £60k in the 2024/25 year, you can use personal pension contributions to reduce your taxable income to ensure you don’t have to pay all or part of this back.
Of course, the caveat to this is that you cannot access any of these funds until you are at least 57.
Any tax relief received is based on the date that the contribution so make sure you make this before 5th April (or 31st March if that is your company year-end).
2. Allowances – Use them or lose them!
The personal allowance is £12,570, the dividend allowance is £500. If you haven’t used these allowances, they don’t roll over into the next year.
If you have your own company, consider if you’ve fully utilised these personal allowances, consider how and when you are paid. Does your spouse earn less than £12,570? You could claim the marriage allowance transfer.
The ISA allowance currently stands at £20k per year. If you have excess cash, then you only have a few days before the 2024/25 window for depositing to an ISA closes.
3. Be aware of thresholds
Are you close to going over the basic rate threshold (£50,270), or even the higher rate threshold (£100,000) in 2024/25? If you’re close, it’s best to check if you can afford to pay yourself slightly less in March. Could you pay more in the new tax year instead?
4. Capital Gains Exemption
If you have property or assets, have you considered selling? If you have, don’t forget that once the new tax year rolls over you’ll lose the £3k capital gains exemption (although you’ll get a new one in the new tax year).
If you are selling up or exiting your business and qualify for Business Asset Disposal relief you only have a few days before this rate increases from 10 to 14%, so be quick!
5. Cashing in an Investment? Now could be the time to do it!
Do you own investments or have pensions that you are thinking of drawing down? You should carefully consider if it may be beneficial to cash in or draw out before the year end to make use of your tax bands as noted above.
All of our tips are heavily specific to your personal circumstances. If you require detailed guidance based on your circumstances, please contact our team at Rogers Spencer who will be happy to help!
📞 0115 960 8412
📧 advice@rogers-spencer.co.uk
Robin Maxwell
Robin MaxwellRobin Maxwell is a partner of Rogers Spencer and has been working with us since 2003. Robin specialises in Accountancy Solutions, Audits and Tax and VAT. Find out more about Robin here.