Hi [FIRSTNAME],
As we approach 5 April, now is the perfect time to review your personal and business finances to take full advantage of tax-saving opportunities before the 2024/25 tax year ends.
Here are 7 key year-end tax planning tips you shouldn’t ignore:
1. Maximise Your Allowances
Use your allowances before they reset:
- Personal allowance – £12,570
- Dividend allowance – £500
- Capital Gains Tax exemption – £3,000
- ISA limit – £20,000 tax-free
2. Use Your CGT Allowance Strategically
If you hold crypto, shares, or property (excluding your main home), consider selling and repurchasing assets to “rebase” them and use this year’s CGT allowance.
3. Income Shifting Between Spouses
If your spouse or civil partner pays less tax, consider transferring income-generating assets like property, dividends, or savings to make the most of their unused allowances.
4. Pension Contributions
You can contribute up to £60,000 this tax year—and carry forward unused allowances from the past three years. Pension contributions reduce your taxable income and grow tax-free.
5. Director Salary & Dividends
If you’re a company director, review your salary/dividend mix. A small salary (within NI thresholds) topped up with dividends remains a tax-efficient strategy.
6. Charitable Donations (Gift Aid)
Donations made before 5 April can reduce your income tax bill and even be carried back to the previous tax year if you act before submitting your return.
7. Inheritance Tax Planning
Use your £3,000 annual gift exemption or consider larger gifts into trusts for long-term inheritance tax reduction and estate planning.
FAQs
Why is the UK tax year end on 5 April?
The UK tax year ends on 5 April due to historical calendar reforms. Originally, the tax year began on 25 March (Lady Day) in the Julian calendar. When the UK adopted the Gregorian calendar in 1752 and lost 11 days, the tax authorities adjusted the fiscal year end to 5 April to preserve a full year of tax revenue.
What is a tax planning strategy?
A tax planning strategy is a proactive approach to managing your income, investments, and expenditures to legally minimize tax liability. It includes actions like maximizing allowances, contributing to pensions, shifting income, using reliefs and exemptions, and timing asset sales to optimize tax outcomes.
How much can I earn before I pay 40% tax in the UK?
In the 2024/25 tax year, you start paying 40% income tax once your income exceeds £50,270. This is the higher-rate tax threshold. The 20% basic rate applies up to that point after your £12,570 personal allowance is used.
Do you pay tax in April in the UK?
Not necessarily. While the UK tax year ends on 5 April, tax payments depend on your tax situation. Self-assessment payments are usually due on 31 January and 31 July, while PAYE tax is deducted monthly from salaries. April is a key time for tax planning and reviewing the past year’s liabilities.
What date does the UK tax year end?
The UK tax year ends on 5 April each year. The new tax year starts on 6 April.
What is the trading income allowance?
The trading income allowance lets individuals earn up to £1,000 tax-free from self-employment or casual trading (e.g., selling on eBay or freelancing). If your income is below £1,000, you don’t need to report it. If above, you can deduct the allowance instead of actual expenses.
What is tax planning in the UK?
Tax planning in the UK involves using HMRC-approved strategies to manage your financial affairs to reduce your tax bill. It covers personal income, pensions, capital gains, inheritance tax, business structure, and more. Effective planning ensures compliance while optimizing tax efficiency.
How to reduce tax burden in the UK?
To reduce your tax burden, you can:
- Maximize your personal and family allowances
- Contribute to pensions and ISAs
- Use tax-efficient investment vehicles
- Make charitable donations with Gift Aid
- Claim business and work-related expenses
- Split income between spouses
- Take advantage of reliefs like EIS, SEIS, and R&D tax credits
What is tax planning most commonly done to?
Tax planning is most commonly done to reduce tax liability, maximize post-tax income, and ensure compliance with tax laws. It’s especially important near the end of the tax year to take advantage of allowances and optimize timing for income, expenses, and investments.
Need Help Before 5 April?
Our tax experts can help you implement these strategies and save more before the deadline. Book your consultation today.