There’s just over two months left till the end of the tax year on 5 April. Here are key changes to have in mind, and things you can do to ensure you don’t miss out.
The end of the tax year is a predictable annual reset for many financial and taxation-related allowances.
Although these are predictable our lives are not, and it is natural sometimes to find ourselves short of time to cross the Ts and dot the Is ahead of the deadline.
The Government typically makes tweaks to its rules, allowances and tax levels the year before too, which some people might miss in the course of normal events.
With that in mind, we’ve pulled together a list of key changes to be aware of, and allowances to remember to take advantage of before you lose it at the end of the tax year!
Key changes
A number of changes have already taken effect.
This includes a tweak to capital gains tax (CGT) on share sales, and a drop in the CGT lifetime limit for investor relief from £10 million to £1 million.
VAT as of 1 January is now chargeable on private schooling fees meanwhile.
As for what’s coming, there are some key changes announced in last year’s Autumn Budget to be aware of.
From 6 April electric vehicles will pay Vehicle Excise Duty (VED) for the first time, as petrol and diesel vehicles already do.
The current non-UK-domiciled taxation system will come to an end and be replaced by a new residency-based system.
Further, temporary reliefs on Stamp Duty Land Tax (SDLT) applied to home purchases take effect from 1 April. This will see the tax-free relief threshold on home purchases revert from properties up to £250,000 back down to £125,000. Buyers of properties valued between £125,001 and £250,000 will face a 2% charge on the purchase prices.
The state pension is set to rise from 6 April by 4.1%. This means weekly payments of the new full state pension will increase from £221.20 to £230.25.
Elsewhere, employer National Insurance Contributions (NICs) are rising from 13.8% to 15%. The impact of this won’t be direct in people’s wallets, but a range of employers have criticised the measure, and it has already been cited for a softening in the jobs market in recent months.
Use it or lose it!
The key annual allowances to remember have changed little in the past year. Those include:
• ISA allowances – £20,000 in total including £4,000 for a Lifetime ISA (LISA)
• Junior ISA allowance – £9,000
• £40,000 pension contribution allowance
• £12,570 income tax personal allowance
• £1,260 marriage allowance
• Inheritance tax (IHT) allowances – £3,000 in annual gifts and the seven-year rule
• CGT allowance – £3,000
• Dividend allowance – £500
Collectively these allowances make extremely beneficial tax liability reductions possible and should not be missed wherever conceivable.
There is not much more time to use up key allowances before the end of the tax year. It is also really important to remember that many banking, pension and other financial providers we rely on to move funds, or make other changes, can be bureaucratic and slow to enact orders.
This means that although the deadline is 5 April, making these key decisions on 4 April just isn’t a sensible option. Ensure the changes you want happen now in order to avoid disappointment, or even an adverse impact on your finances.
If you’d like help with any of these key choices, don’t hesitate to get in touch.
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