Looking forward to a Happy New Tax Year?

The new tax year starts on 6 April and with this brings a raft of changes to personal tax, making an early review of the year ahead a wise move. What actions will you take to ease the tax burden?

The new tax year starts on 6 April, heralding a raft of changes that will make an early tax review of the year ahead a wise move.

There is always plenty of attention given to planning for the end of the tax year, making use of allowances that are otherwise lost at midnight on 5 April. A March Budget normally adds to the focus as speculation mounts about what might change even before the tax year ends. Much less attention is paid to planning for the start of the new tax year, but that can be just as valuable an exercise.

In 2023/24, there will be important personal tax changes – and, in the face of double-digit inflation, non-changes – taking place:

As a result, personal tax bills could increase in 2023/24, even if income does not. For example, if you are a higher rate taxpayer, the halving of the dividend allowance could cost you an extra £337.50 in tax (and £506.25 in 2024/25). Worse still, you might find that you have been ‘promoted’ from higher rate to additional/top rate. HMRC estimates that nearly a quarter of a million taxpayers will fall into this unhappy category.

There are a variety of actions to ease the increasing tax burden if taken early in the tax year. For example, investing in an ISA in April 2023 rather than March 2024 removes the income that would be generated from the investment from your 2023/24 tax calculation. Some other strategies are more complex, so advice is essential.

The Financial Conduct Authority does not regulate tax advice.
Tax treatment varies according to individual circumstances and is subject to change.

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