As the UK tax year draws to a close on April 5th, you have just enough time to take stock of your financial situation and ensure you're making the most of available allowances and reliefs. Here’s a guide to key actions you can take before the deadline.
1. Use Your ISA Allowance
Every individual has an annual ISA allowance of £20,000 for the 2024/25 tax year. This allowance cannot be carried forward, so if you haven't used it yet, now is the time to top up your ISA and enjoy tax-free savings and investments.
2. Maximise Pension Contributions
Contributing to your pension is a tax-efficient way to save for retirement. You can contribute up to £60,000 (or 100% of your earnings, whichever is lower) and benefit from tax relief. Additionally, if you have unused allowances from the past three years, you may be able to carry them forward.
3. Utilise Capital Gains Tax (CGT) Allowance
For the 2024/25 tax year, the CGT allowance is £3,000. If you have investments or assets to sell, consider realising gains up to this threshold to avoid paying CGT. If necessary, spreading disposals across multiple tax years can help minimise liabilities.
4. Make Use of Your Personal Allowance
The standard personal allowance for income tax is £12,570. If you or your spouse earns below this threshold, it may be worth shifting income-generating assets to make better use of available allowances.
5. Take Advantage of Gift Allowances
Each individual can gift up to £3,000 tax-free per year without it being considered part of their estate for Inheritance Tax purposes. If you haven’t used last year’s allowance, you can carry it forward, doubling your exemption to £6,000.
6. Consider Charitable Donations
Gift Aid allows charities to claim an extra 25p for every £1 donated, and higher-rate taxpayers can claim back tax relief on donations. If you’re planning to give, doing so before April 5th ensures it counts for this tax year.
Final Thoughts
Taking proactive steps before the tax year ends can help you optimize your finances and reduce unnecessary tax burdens. If you’re unsure about any aspect of your tax situation, seeking advice from a financial adviser or tax professional can provide tailored guidance.
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