Tax Planning

Tax Planning is an essential part of managing your finances efficiently and making informed decisions throughout the year to maximise your personal allowances whilst minimising your liabilities legally.

We mainly think about this when it is time for our year-end accounts or completing our annual self-assessment, however with allowances changing regularly affecting what you can earn before paying taxes an effective plan each year can help you navigate your way through.

Understand your tax situation.

This includes assessing your income, allowable expenses, investments and tax deductions

Know your tax deadlines

Map out when your key filing dates are due; e.g. VAT, PAYE, Accounts or tax returns and paying any tax due and making contributions to pensions on time. Missing deadlines can result in penalties and interest.

Maximising allowances – Use it or Lose it!

  • Spouse & civil partner allowances – If you are not using your allowances you could be missing out. Marriage allowance currently lets you transfer £1260 of your personal allowance to your husband, wife or civil partner. It may also make sense to transfer assets to your spouse/ civil partner who are not using their personal allowances
  • Savings – if you are a basic rate taxpayer you can earn up to £1000 in interest as your personal savings allowance
  • Dividends – capitalise on dividend allowances over your personal allowance, the current dividend allowance of £1000 drops to £500 next April
  • Capital Gains Tax – although this won’t apply to many of us if you sell or give away an asset worth more than £6000 (not including main homes and cars amongst other items) you may need to pay Capital Gains tax. Allowances this year dropped to £6k from £12,300 and are set to fall again to £3k in 2024.
  • Pension Allowances – Basic rate taxpayers receive 20% tax relief on their contributions. Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax. You’ll only pay tax if you go above the annual allowance. This is £60,000 this tax year.

Pension gaps – Whilst we are on the subject of..

You have until 5 April 2025 to pay voluntary national insurance (NI) contributions if you have any gaps in your NI record between 2006 and 2016.

Why these ‘years’ matter

The full ‘new’ state pension is currently £203.85 a week – however how much you receive depends on how many ‘qualifying’ full national insurance (NI) years you have. Most collect NI years through working and paying NI, but you can also get them if you’re claiming benefits or caring for others.

In general, you require around 35 full NI years to get the maximum state pension, though some will need a lot more depending on your age and NI record being up to date.

In summary

It’s all about reviewing your position, what you are entitled to and how best to capitalise on tax efficiency through tax planning and we can help navigate through the best way to do this.

Get in touch

Whilst it may seem like you are using your allowances and being tax efficient it’s all about planning ahead and this is where we at Elevate can help.

Book a call with us and we’d be happy to help you put an effective plan in place

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