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With the new tax year fast approaching, now is the perfect time to review your finances and make sure you’re making the most of your tax-free allowances before they reset on 6 April 2025. Whether you're an individual taxpayer, business owner, or investor, there are several opportunities to reduce your tax bill and keep more of your hard-earned money.
Maximise Your Personal Allowances
Every UK taxpayer has a Personal Allowance, which is the amount of income you can earn before paying tax. For the 2024/25 tax year, this remains at £12,570. If you’re married or in a civil partnership, you may be able to transfer up to £1,260 of your Personal Allowance to your spouse using the Marriage Allowance, saving up to £252 in tax.
Use Your ISA Allowance
Individual Savings Accounts (ISAs) allow you to earn tax-free interest or investment gains. For this tax year, the annual ISA limit is £20,000, and it resets on 6 April. If you haven’t used your full allowance, now is the time to top up your ISA and protect your savings from tax.
Dividend Allowance and Capital Gains Tax Exemptions
For business owners and investors, there are further allowances to consider:
Dividend Allowance: This has reduced to £500 in 2024/25. If you receive dividends from investments or a limited company, consider whether you can distribute more before the allowance potentially drops further.
Capital Gains Tax (CGT) Exemption: This has also dropped to £3,000 from April 2024, so it may be worth selling a proportion of your assets before the tax year ends to utilise as much of this allowance as possible.
Pension Contributions & Tax Relief
One of the most effective ways to reduce your tax bill is through pension contributions. You can contribute up to £60,000 per year (or 100% of your earnings, whichever is lower) and receive tax relief at your marginal rate. If you’re a higher-rate taxpayer, this is a great way to cut your tax bill while securing your retirement.
Other Key Tax Reliefs
Annual Investment Allowance (AIA): If you're a business owner looking to invest in new equipment or machinery, you can deduct the full cost (up to £1 million) from your taxable profits.
Gift Aid Donations: If you donate to charity, you can claim tax relief on the donations, and the charity benefits from an extra 25% through Gift Aid.
Savings Allowance: Basic rate taxpayers can earn £1,000 in savings interest tax-free, while higher-rate taxpayers get £500.
Act Now – The Clock is Ticking!
With just a few weeks until the tax year ends, now is the time to take action. Whether it’s topping up your ISA, making pension contributions, or using your dividend and CGT allowances, acting before 6 April could save you money.
At Derbyshire Accountants, we can help you plan efficiently and ensure you’re making the most of the tax-saving opportunities available. Get in touch today to review your finances before the deadline!
Charlotte Derbyshire FCCA
Director
Derbyshire Accountants Limited
01256 591196
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