The tax year end is once again coming around on 5 April 2024. Here are some things to think about ASAP before this happens.
Claim a tax rebate for 2019/2020 before you lose it
Make sure you have claimed a tax rebate for the 2019-20 tax year. You can claim tax relief on your professional expenses for the current tax year and the previous four tax years. Currently you can claim for all expenses from 6 April 2019. However, once we reach 6 April 2024 you will lose the ability to make a claim for any allowable employment expenses incurred between 6 April 2019 and 5 April 2020. So if you did incur such expenses and have not made a claim then don’t miss out – make that claim asap. You can use the Medics’ Money free step by step guide.
Maximise your ISA allowance (if you can!)
Don’t forget you can save up to £20,000 each tax year in ISAs whether that be cash ISAs, stocks and shares ISAs or Lifetime ISAs. Any income from interest or dividends will be tax free if within an ISA; and any capital gains in an ISA will be free from Capital Gains Tax. With changes coming up to reduce the tax-free dividend allowance and the tax-free allowance for Capital Gains Tax it is even more important to use ISAs as tax free wrappers where you can. You have until 5 April 2024 to use what you can of the £20,000 ISA allowance for 2023/2024. From 6 April 2024 a new £20,000 allowance will be available. Your children also have a £9,000 allowance each tax year via the Junior ISA.
And don’t forget the Lifetime ISA or LISA – the Government will pay 25 pence for every £1 you put into your LISA up to a maximum of £1,000 if you put £4,000 in. If you turn 40 this year, make sure you set up a LISA if you want to do so – by the time you reach your 40th birthday you lose the opportunity to set one up in the future (but not to contribute which you can do until you turn 50).
Utilise the Capital Gains Tax (“CGT”) Annual Allowance and Dividend Allowance
In the 2023-24 tax year which is about to end, the CGT tax free Annual Allowance was cut by more than half to £6,000 – this is decreasing further to £3,000 from 6 April 2024. If you have an asset sitting at a capital gain that will be subject to CGT, that you intend to sell then consider doing so (or selling part of the asset if the asset allows it e.g. shares) before 6 April 2024 to utilise the higher allowance. Of course this may not be easy to do, many assets are not liable to CGT (including shares in ISAs) and you should only sell an asset if you want or need to (not because of tax) but it is something to think about. You can find out more about Capital Gains Tax in this YouTube video.
In a similar vein, the Dividend Allowance was cut this tax year to £1,000 and is being cut again from 6 April 2024 to £500. Most people won’t have the ability to dictate when or if dividends are paid but for those who trade or operate via a company (e.g. for private practice work) may wish to pay out a dividend to utilise this allowance.
The Inheritance Tax Annual Exemption
If you are at the stage where you are considering the Inheritance Tax liabilities that your loved ones may pay when you pass away, make sure you utilise your yearly annual exemption of £3,000. You can also use the Annual Exemption from the tax year before if not used. You can find more on Inheritance Tax here.
