Pre 5th April tax planning ideas

As we approach another tax year end our thoughts turn to any tax planning that can be undertaken.

You can find a link to our tax planning guide as a reminder of the basic planning opportunities to be considered each year. But with a Budget looming on 15 March 2023, it would be prudent to consider the following planning in particular:

Pension contributions

All in all, tax relief on pension contributions is very costly to the Exchequer, with an estimated cost of £42billion. It’s very valuable to the pension saver with relief available at top rates of tax. There remains the risk that the Chancellor might curtail this relief. Higher rate and additional rate tax can be saved on pension contributions, but be wary of the limits on the tax relief available to avoid a charge.

Managing income levels tax-efficiently (2022/23)

Pension savings and gift aid donations can produce particularly significant tax savings for those:

• With income over £50k, to avoid the high income child benefit clawback charge and avoid 40% tax
• With income over £100k, to preserve the personal allowance and
• With income over £150k, to avoid the highest of tax rates (we already know about the reduction in the additional rate band, see below)

Capital Gains Tax (CGT)

CGT rates remain at an all-time low. Might the Chancellor consider aligning the rates with income tax rates?  Might now be the time to crystalize any gains and utilise any unused losses? We already know about the reduction in the annual exempt amount, see below.

Known tax hikes

From 6 April 2023 there are changes to the additional rate of tax threshold, the dividend allowance and the CGT exemptions. Please see Harriet’s blog for further details https://whitingsllp.co.uk/autumn-statement-impact-on-individuals/

ISAs shelter shares from both income tax and CGT. You may want to consider moving shares into ISAs within your £20k ISA subscription limit and utilising your £12,300 CGT exemption before 5 April. With equity yields moving back to pre-pandemic levels, there are significant tax savings to be had.

Please let us know in good time if you would like us to advise on any particular tax planning for you pre Budget or pre 5 April.

Disclaimer - All information in this post was correct at time of writing.