The tax year end is once again coming around on 5 April 2023. Here are some things to think about ASAP before this happens (and one thing for companies before 1 April)! If you prefer to listen to all of this, check out this week’s episode of the Medics’ Money Podcast here.
- Make sure you have claimed a tax rebate for the 2018-19. 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 2018. However, once we reach 6 April 2023 you will lose the ability to make a claim for any allowable employment expenses incurred between 6 April 2018 and 5 April 2019. 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 2023 to use what you can of the £20,000 ISA allowance for 2022/2023. From 6 April 2023 a new £20,000 allowance will be available.And don’t forget the Lifetime ISA or ISA – 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.
This week’s Triage episode has covered some worrying speculation that ISAs might be reformed soon… Take a listen here.
- Check your State Pension Record: OK, as of 7 March this one got a reprieve but when I originally started writing this blog, the deadline was 5 April 2023! Basically, the Government are giving people the chance to check their State Pension Records which basically means checking how many qualifying years of National Insurance Contribution you have. To qualify for the full state pension, you need to have 35 years of National Insurance Contributions. If a taxpayer does not have enough full years of NI contributions this will likely affect their state pension which is currently around £10,000 a year.Usually, you can only go back 6 tax years to make voluntary contributions to fill any gaps in your record. However, the government are currently allowing people to make voluntary contributions for any gaps they may have all the way back to 6 April 2006. The deadline for this is now 31 July 2023 and you can make a voluntary contribution of £15.85 per week which is basically £824.20 to make the year a qualifying one. From 1 August 2023 the timeframe for making voluntary contributions will revert to the usual 6 years so it will only be possible to go back to the 2017/18 tax year; the rate of payment will increase to £17.45 per year or just over £900 to fill a year.
So, in summary, you may want to check your records – which you can do via your Personal Tax Account. If there are gaps, consider carefully whether you should make a voluntary contribution to fill that gap. We can’t give financial advice of course and it is up to every taxpayer to consider their position, but we wanted to bring this to everyone’s attention so that this opportunity can be considered and not missed.
- Super-deduction: This one is for anyone who has their own trading company. To incentivise companies to make investments after Covid, Rishi Sunak, when Chancellor, announced the “Super Deduction” which gives companies an enhanced 130% super-deduction capital allowance qualifying assets. Effectively companies can cut their tax bill by up to 25% for ever £1 that they invest. This is due to end on 31st March 2023 so if there are any assets that your company needs then consider purchasing them asap to take advantage of this incentive.