MONEY MATTERS
ENSURE YOU DON’T LOSE OUT BY REVIEWING YOUR TAX AFFAIRS BEFORE THE TAX YEAR END
The imminent end of the tax year is a time for reviewing your tax planning, says Jamie Norton of Lovewell Blake.
With the end of the tax year just weeks away, now is the time to be considering what you need to do to make sure you are taking advantage of all of the various allowances which are available – and to be aware of what changes are around the corner in April. Perhaps the biggest tax change for the next tax year (2022/23) is the introduction of the Social Care Levy, which will in effect add 1.25% to every employee’s National Insurance bill, and the same to every employer’s NI bill as well. For those in employment there is probably little you can do about the extra burden (although talking to your employer about considering salary sacrifice for extra pension contributions might be one avenue worth pursuing). However, owner-managers of incorporated business who pay themselves in dividends certainly need to think about the timing of any payments.
For those disposing of assets such as second homes, rental property and shares, any gain is subject to capital gains tax, apart from the first £12,300 each year. That allowance disappears at the end of each tax year, so if you haven’t yet used this allowance and have assets to dispose of, you need to get a move on. Finally, Christmas may be over, but you can give away a total of £3,000 in gifts in any one tax year without affecting any future inheritance tax liability. Staggering such gifts across two tax years effectively doubles the allowance – but again, timing is key.
Jamie Norton is a partner based at Lovewell Blake’s Thetford office.
From 5th April, the Social Care Levy will also apply to dividend payments, adding an effective extra 1.25% tax to the rates already paid in such income. Business owners who might be planning to declare a dividend soon need to talk to their advisors about the timing of when these are declared; doing so before the end of the current tax year means they will avoid the new levy, although there are other considerations such as taking your income into a higher tax bracket to be considered as well. Don’t forget also that there is a Dividend Allowance in the current tax year, which means the first £2,000 of any dividend income is free of tax even if you have already used up your personal allowance. Other ‘use them or lose them’ allowances include the pension contributions allowances, which broadly permit you to contribute up to £40,000 a year into your pension and benefit from tax relief (provided your contributions don’t exceed your total income). Likewise, everyone can invest up to £20,000 into ISAs each tax year, so if you haven’t yet used up that allowance, you only have a few weeks. Please mention the About Thetford Magazine when responding to advertisements 35
