We witnessed a myriad of Prime Ministers, Chancellors, and budget announcements in 2022 which has made our world even more challenging than usual. High energy costs, rising interest rates, and suffocating inflation must result in our economy shrinking in 2023 – all this makes it even more important to keep an eye on our finances.
The UK is facing its biggest tax burden in years. After the 6th April 2023, more individuals will see their tax liabilities increase as a result of reductions and the freezing of allowances, exemptions and tax rate bands. Arranging your finances as tax efficiently as possible before 6 April 2023 has never been more important.
Key points to note:
- Equalise income and gains between you and your spouse/civil partners to make the best use of your allowances and exemptions before some reduce on 6 April 2023
- With the tax-free dividend allowance reducing and corporation tax increasing, is how you extract income from your company still tax efficient?
- Use your £12,300 CGT annual exemption (£6,150 for Trusts) before it reduces to £6,000 (£3,000 for Trusts) on 6 April 2023
- Determine capital losses and ensuring the same spouse who realised the losses generates capital gains in the future
- Use your annual £20k ISA allowance to generate tax-free income and gains.
- Determine how much-unused pensions annual allowance you have available in the current tax year and the three previous tax years. Knowing that income in excess of £100k effectively suffers tax at 60% and income in excess of £125,140 will be liable to 45% from April 2023, which tax year will provide you with the most tax relief?
- With corporation tax rising, should your employer pay your pension contributions?
With the help of an Independent Financial Adviser, consider
- Whether your ISAs attract IHT relief
- Investing in Venture Capital Trusts to provide tax-free dividend income and 30% Income Tax relief on the initial sum invested
- Enterprise Investment Scheme (EIS) investments to provide 30% Income Tax relief in the tax year the shares are subscribed for – or the previous tax year?
- Could Capital Gains Tax paid previously be deferred into EIS investments?
Please do call us on 01223 810100 if you would like to chat through any of the above in more detail.
