Making The Most of Tax Year End Allowances

by Handy Mag
Published: Last Updated on

Chartered Financial Planner, Louis Maddison from PenLife Associates, explains why you might want to make the most of your allowances and potentially pay less tax.

Louis Maddison from Penlife Associates
Louis Maddison from Penlife Associates

When a new tax year starts, many allowances reset. So, checking if you could make use of allowances before Friday 5 April 2024, when the 2023/24 tax year ends, might help your money go further. It’s important to understand which allowances fit into your financial plan and suit your goals.

Everyone has certain reliefs and allowances when it comes to earnings, incomes, savings, and investments. Making the most of these reliefs and allowances can reduce your tax liability and help make your money to go further.

Reviewing your finances now could mean you discover an allowance you could make use of before the deadline.

Here are 7 allowances you might want to use before the end of the 2023/24 tax year:

  • Marriage Allowance 2023/24 allowance: £1,260
  • ISA Allowance 2023/24 allowance: £20,000
  • JISA Allowance 2023/24 allowance: £9,000
  • Dividend Allowance. 2023/24 allowance: £1,000
  • Capital Gains Tax Annual Exempt Amount 2023/24 allowance: £6,000
  • Pension Annual Allowance. 2023/24 allowance: £60,000
  • Inheritance Tax Annual Gift Exemption. 2023/24 allowance: £3,000
  • Why should you maximise your Pension and ISA allowances?

Well, contributions to a pension will gain tax relief, adding an extra 20% to the amount invested at outset. A higher rate taxpayer will be able to claim an additional 20% in respect of contributions matched by earnings in that band. So compared to saving into a bank account, the starting value is increased immediately and over time has prospects of growing into a larger fund for the future.

ISAs are important for tax efficient growth over time. They do not gain tax relief at outset, but while the money is held within an ISA, the funds can grow free of any income or capital gains tax and there is no tax on withdrawals in the future.

We have created a guide which explores seven allowances, including Pension and ISA allowances, to consider using before the 2023/24 tax year end. To request your free copy, please follow the instructions on the cut-out.

If you would like some guidance as to whether you are making the most of these allowances, please contact us on 01904 661140. The call is held at our expense. Alternatively, please email enquiries@pen-life.co.uk, or head to www.pen-life.co.uk/contact-us. You may well discover your money is not working as hard as it could.

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