As the end of the 2023/24 tax year approaches, you may already be looking for ways to maximise your tax efficiency before the 5th of April 2024.

There are many reliefs and allowances available that could help reduce your overall tax bill. From capital gains tax to pension contributions, and ISA allowances to inheritance tax planning, there’s a multitude of areas where strategic decisions can make a significant difference.

So we’ve put together a checklist to help ensure that you’re making the most of your tax-saving opportunities before the tax year ends.

Your Tax Planning Checklist

1. Maximise Your ISA Allowance

Action: Ensure you’ve used your full ISA allowance of £20,000. Contributions can be split between a Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, and if eligible, a Lifetime ISA (up to £4,000 within the £20,000 limit) to receive tax-free growth and withdrawals.

2. Personal Pension Contributions

Action: Consider increasing your pension contributions to maximise tax relief. The maximum pension contribution you can make under the pension annual allowance and benefit from tax relief is the lower of 100% of your earnings or £60,000. You may be able to carry forward unused allowances from the previous three tax years. Contributions receive tax relief at your highest rate of income tax.

Unlike personal contributions, an employer can contribute more than an employee earns, up to the current annual allowance of £60,000. The £60,000 is the total amount of both personal and employer contributions

If you have ‘adjusted income’ of over £260,000, or you’ve already accessed your pension, then your contributions might be limited to as little as £10,000.

3. Utilise Your Capital Gains Tax Allowance

Action: Use your annual Capital Gains Tax (CGT) exemption, which stands at £6,000 for the 2023/24 tax year. If you have unused allowances, consider selling assets or making disposals to utilise this exemption. Couples should consider transferring assets between each other to maximise both allowances.

4. Claim Your Personal Allowance

Action: Your Personal Allowance decreases by £1 for every £2 of income above £100,000. If your income is near this threshold, consider making pension contributions or charitable donations to reduce your taxable income and preserve your Personal Allowance.

5. Tax-Efficient Investments

Action: Consider investing in tax-efficient schemes like Venture Capital Trusts (VCTs), Enterprise Investment Schemes (EIS), and Seed Enterprise Investment Schemes (SEIS). These can offer income tax relief, CGT exemption, and loss relief to mitigate risk, subject to various conditions.

6. Maximise Your Dividend Allowance

Action: The Dividend Allowance is £1,000 for the 2023/24 tax year. Ensure you’re making the most of this allowance, as dividends received above this threshold are taxed at rates dependent on your income tax band. Consider holding investments in an ISA to receive tax-free dividends.

7. Inheritance Tax Planning

Action: Use your annual gift allowance of £3,000, which can be carried forward one year if you haven’t used it, to reduce your potential Inheritance Tax (IHT) liability. Consider making additional gifts out of excess income; these are immediately exempt from IHT if they don’t affect your standard of living.

8. Check Your Tax Code

Action: Ensure your tax code is correct to avoid overpaying or underpaying tax. Discrepancies in your tax code can result in unexpected tax bills or refunds.

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This checklist is a useful starting point to help you become more tax efficient before the end of the 2023/24 year. However, tax rules can be complex and subject to change, so we recommend that you also talk to your Warr & Co accountant to tailor these actions to your individual circumstances.

If you don’t yet have a Warr & Co accountant, get in touch for a free consultation today and see how we might be able to assist you in your tax planning.