Tax Planning Services

Maximise pension contributions

Pension contributions can reduce your liability by increasing the tax thresholds. Tax relief is available on the full annual allowance which for 2023/24 is £60,000 or 100% of your salary, whichever is greater.

If you pay pension contributions out of your salary, both you and your employer have to pay National Insurance Contributions (NICs) on that salary. When your employer pays a contribution directly into your pension scheme, the employer receives tax relief for the contribution and there are no NICs to pay – a saving for both you and your employer.

Use your lifetime allowance

The lifetime allowance is the limit on how much you can build up in pension benefits over your lifetime while still enjoying the full tax benefits. However, it was announced in the Spring Budget 2023 that this will be removed from April 2023 before it is abolished entirely from April 2024.

Maximise Individual Savings Accounts (ISAs)

You can put the entire amount into a Cash ISA, a Stocks & Shares ISA, an Innovative Finance ISA or any combination of the three. Usually when you invest, you have to pay tax on any income or capital gains you earn from your investments. But with an ISA, provided you stick to the rules on how much you can pay in, all capital gains and income made from your investments won’t be taxed. Every year you have an ISA allowance, which is currently £20,000 for the 2023/24 tax year.

Capital gains tax – utilise any capital losses

If you realise capital gains and losses in the same tax year, the losses are offset against the gains before the capital gains tax exempt amount (£6,000 in 2023/24) is deducted. Capital losses will be wasted if gains would otherwise be covered by your exempt amount. Consider postponing a sale that will generate a loss until the following tax year or, alternatively, realise more gains in the current year.

Income tax – Check your PAYE code

It’s important to check your tax code as it is based on the amount of income tax you should be paying and the amount you can earn before tax applies.

Reduce inheritance tax liability

Inheritance tax is chargeable at 40% on any assets above £325,000 (up to £500,000 if the Residence Nil-Rate Band is available) so understanding how to manage your estate which is made up of your pensions, property, savings, investments etc as tax-efficiently as possible is vital.