Making the most of your tax savings this tax year: Time is running out!

Making the most tax-efficient choices when it comes to personal finances is always worthwhile, but you only have until 5^th April 2023 to take advantage before the end of the tax year. Here are our tips to make sure you’ve done everything you can to help your money work harder on your behalf. 

Savings

You can pay up to £20,000 a year into an ISA, and so can your spouse or civil partner (for a combined £40,000 allowance), so now is a good time to top this up if you can, as one of the main benefits is you won’t pay any income or capital gains tax on the returns.  And you can withdraw your money tax free without incurring a penalty should you need it in the future.  Once the new tax year starts on 6^th April 2023, you can pay another £20,000 in too. 

If you have children and are saving on their behalf, you can pay up to £9,000 a year into their Junior ISA, again they won’t pay any income or capital gains tax on the returns.  There are different rules for Junior ISA’s so you should always seek advice before investing.

Pension

If you want to maximise your pension savings, you can also top these up before 5^th April 2023 (to a maximum of £40,000 this year) to get tax relief on what you pay in. If you have unused allowance for the last three years, this can be carried forward to help you save more. 

Higher earners

For higher earners, it can sometimes be beneficial to reduce taxable income for reasons such as:

• Bringing income to below a specific tax band
• Regaining personal allowance (if earning more than £100,000 p/a)
• Losing Child Benefit payments (reductions start if one parent earns over £50,000 p/a)

This can be done by making additional pension payments (up to the maximum annual allowance) or charitable giving.

And finally, if your spouse or partner has taxable income below the personal allowance thresholds they could transfer you some of their personal allowance for the tax year.  This is known as the marriage allowance. 

For more information on making tax savings before the deadline and even more specialist tax planning advice, get in touch with us.