Five ways to maximise your allowances before the end of the tax year
As the tax year-end approaches, it is important to take full advantage of available tax reliefs and allowances. Proper planning can help reduce liabilities and ensure financial efficiency. Here are five ways to maximise allowances before the deadline.
Utilise your ISA allowance
ISAs provide a tax-efficient way to save, shielding funds from income tax and capital gains tax, or CGT. The annual ISA allowance for the 2024/25 tax year is £20,000 per person. Using the full allowance ensures that savings and investments benefit from tax-free growth.
Maximise pension contributions
Pension contributions offer significant tax advantages, as they reduce taxable income and benefit from tax relief at the highest rate of tax paid. Higher earners, particularly those with incomes exceeding £100,000, can use pension contributions to mitigate the gradual loss of the personal allowance.
Take advantage of capital allowances
Business owners can reduce their tax bill by making qualifying purchases before the year-end. The Annual Investment Allowance enables businesses to claim 100% tax relief on up to £1m spent on eligible equipment and machinery. Additionally, full expensing allows limited companies to deduct the full cost of new plant and machinery investments from taxable profits.
Using the expertise of a locally based accountant can help you take advantage of opportunities. For example, Gloucester accountants, such as https://www.randall-payne.co.uk/services/accountancy/gloucester-accountants/, can assist.
Make use of tax-free allowances
The Dividend Allowance for 2024/25 is £500, meaning shareholders can receive dividends up to this amount tax-free. Similarly, the CGT exemption stands at £3,000, allowing individuals to sell assets within this limit without incurring tax. Structuring withdrawals and disposals before the tax year-end can help optimise overall tax efficiency.
Consider tax-efficient giving
Gift Aid donations provide a tax-efficient way to contribute to charitable causes. Making donations before the tax year-end ensures that these benefits can be included in the current year’s self-assessment tax return.
By reviewing financial plans and taking action, individuals and business owners can make the most of available allowances and optimise their tax position for the year ahead.
