The start of the new tax year means that a number of tax rises and allowance cuts will come into effect. Not only will you only be able to earn about half the amount of dividends before paying tax on them, capital gains allowance will plummet to pre-millenium levels as well. On top of all of that, inflation is nearing 40-year highs and the nation is in the midst of a cost of living crisis which has made saving money more crucial than ever.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
As a result, the current tax year might be one of the most important years you’ll experience. If you want some tips beyond the usual considerations you’ll see around this time of year, read on for more ways to save on tax while you still can.
Thinking beyond the usual avenues
Taxes are one of life’s inevitables. But there are ways to ensure that you keep as much of your hard-earned money as possible. Of course, exactly what will work for you is entirely dependent on your individual circumstances, so while there are certainly things you can do on your own, the best results will be achieved through working with a professional.
You probably hear the same tax-saving advice all the time: make the most of your ISA allowance, carefully consider capital gains and the tax implications, and topping up your pension contributions will help reduce your overall liability. This is all solid advice and should be part of your tax strategy, but here are few other things to consider when trying to save on tax.
First of all, if you’re married or in a civil partnership, if you’re not taking advantage of the rules around gifting assets with a partner, it’s time to start. Unless you are no longer together and are living separately or the asset gifted or sold was done so for business purposes, there is no capital gains tax due if you give or sell your assets to your spouse or civil partner. Dividing your assets allows you to take full advantage of your CGT allowances before they are reduced in the 2023/34 tax year.
Prioritise your personal savings allowance
Did you know that you could earn up to £1,000 in savings interest before any tax is due? The amount you can earn from your personal savings allowance (PSA) depends on your tax bracket — ranging from £1,000 in tax-free savings interest for those in the basic rate tax band, to £500 in the higher rate band, down to £0 for those in the additional rate band. Look for savings accounts with high interest rates to maximise earnings on your savings.
Many people’s aim is to amass enough wealth in their life that they are able to pass some of it down to their loved ones. But there is also an incentive for you with this kind of forward-planning.
Inheritance tax (IHT) thresholds will remain frozen until April 2028. This means that many unsuspecting people could get caught out by IHT in the future. Consider contributing to a Junior ISA or a child’s pension to help their future and help avoid your own tax liabilities in the present.
Maximise your savings with a financial adviser
When it comes to tax planning, the best thing to do is seek professional help. It’s the job of financial experts to know all the latest information that will help you save on tax. To learn more about how a specialist medical financial advisor can help you, get in contact with us today.