Four tax reliefs to make the most of before the financial year ends
With the end of the 2022/2023 financial year on 5 April nearly upon us, the experts at Perrys Chartered Accountants have put together a checklist of tax reliefs to make the most of before it’s too late.
If you are paying into a pension and haven’t yet maximised your contributions, then make sure to do this before the 5 April deadline.
Doing this will help to reduce your income tax liability for the tax year. The tax-free annual earnings allowance is currently set at £12,570 and gradually decreases by £1 for every £2 earned over £100,000. However, pension contributions will reduce your taxable income, so if your contributions keep your annual income below £100,000, you will still benefit from the full personal allowance.
Donations to charity
If you pay Income Tax above the 20% basic rate (currently set at earnings above £50,270), then you can claim back the difference between the tax you’ve paid on the donation and what the charity got back when completing a Self Assessment tax return.
If you don’t complete a Self Assessment form, then you can contact HMRC to inform them of the charity donations you have made.
If you are donating through a Payroll Giving Scheme, any donations you give through the scheme will be taken before Income Tax is deducted.
You can save up to £20,000 for the 2022/2023 tax year into either one type of account or split across all types of Individual Savings Accounts (ISAs). You will not pay tax on interest earned from cash in an ISA or on income or capital gains from investments in ISAs.
If you haven’t used up all your allowance yet this year, then it is worthwhile ensuring that you make the most of it before 5 April arrives.
Capital Gains Tax
The annual Capital Gains Tax exemption allowance for individuals will be reducing from £12,300 this financial year to £6,000 for 2023/2024. Gains made up to the exemption amount are tax free, so if you’re selling assets, it is worthwhile considering this. However, careful planning is required, particularly where property is concerned, so it is a good idea to engage the services of a professional, such as Perrys.