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Top Tips for End of Tax Year 2024

The end of the 2023/24 tax year is 5th April 2024, so you will need to act fast to make the most of our MPO Top Tips for End of Tax Year 2024

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 28 March 2024

8 min read

Top Tips for End of Tax Year 2024

With the end of the current tax year fast approaching, our expert Money Mum Caz has created a list of the easiest ways that you can save money on your taxes. The end of the 2023/24 tax year is 5th April 2024, so you will need to act fast to make the most of our MPO Top Tips.

Our MPO ‘End of Tax Year Tips’ have been designed to make it simple and easy to navigate the end of the tax year. Our aim is to provide full and detailed information about some of the main issues that UK taxpayers face – and how to avoid them.

In this article, we outline our Money Mum Caz’s MPO Top Tips for making the most of your finances before the end of this tax year. This includes easy adjustments to your pension, some important rules around Marriage Allowance, and what to do with your cash ISAs.

A picture of a stopwatch

60-Second Summary – Top Tips for End of Tax Year 2024

The end of the tax year can be confusing, and many people miss out on potential savings because they don’t know what to do. This guide aims to answer your main questions about the end of the tax year, with our experts sharing our best money saving Tax Tips.

There are some of the easy ways to save money on your taxes before the next tax year begins, such as:

  • Pay into your pension: Regularly contribute to your pension to benefit from tax relief and to lower your personal tax bill.
  • Boost your State Pension: Consider paying voluntary National Insurance contributions, especially if you have gaps in your payment history (e.g. due to unemployment, self-employment, maternity leave)
  • Use your Annual ISA Allowance: Take advantage of the Annual ISA Allowance by April 5th, by paying into Stocks and Shares ISAs, Cash ISAs, and Junior ISAs before the deadline.
  • Marriage Tax Allowance: Use your partner’s unused tax allowance, potentially saving up to £252 on your tax bill! Current rules allow for backdating for up to 5 years.

While we all know that the calendar starts in January in the UK, the tax year begins and ends in April every year. The end of tax year date this year is the 5th April 2024, with the 2024/25 tax year starting on the 6th April 2024.

The UK tax year lasts for 12 months in the same way that the calendar year does, so there is a 12 month accounting period.

It does seem like the government has made things overly complicated, by having the tax year start and end in April instead of January. However, these aren’t new rules and this system has been in place for more than 200 years.

The UK tax year ends on 5th April every year because New Year’s Day used to be on March 25th on the old British Calendar. This meant that the end of the financial year (fiscal year) fell in what would have been the first month of the year at that point.

After the UK swapped to the ‘Gregorian Calendar’ in 1752, it was decided that it was easier to leave the tax year as it was to avoid any financial issues.

In our most recent MPO Money Mum & Dad video, our Money Mum Caz explained exactly what happens at the end of each tax year and how to make the most of your money before it’s too late.

VIDEO

Below we explain some of the best ways to save money by taking advantage of current tax rules and loopholes. Some of these are due to change after 5th April 2024, so don’t wait too long or you may not be able to benefit from them.

A lot of us don’t think regularly about our pensions, but pensions are one of the most tax-efficient methods of investing in the UK. It’s always best to think of your pension as an investment for your future – and pension contributions are usually tax-free too!

Adding to your pension can also lower your personal tax bill, which can help you to avoid hitting Child Benefit limits if this applies to you.

Your Annual Pension Allowance is the amount that you can save in your pension before being taxed, which is £60,000 at the moment. The main things that count towards your annual allowance are:

  • The total amount that you pay into your pension each year (this can be voluntary payments or payments from your employer)
  • Any increase to a benefit scheme that has happened within a tax year

Your pension provider will usually let you know if you have paid in more than your annual allowance this year. You can request a statement that tells you exactly how much you have paid in if you aren’t sure. This can be useful to help you keep track of how close to your Annual Allowance you are, especially if you have more than one pension.

It’s also possible to carry forward your Annual Pension Allowances from the last 3 years if they haven’t been used.

Note: Your Annual Pension Allowance might be slightly lower than £60,000 if you have accessed some of your pension early, or if you have a high annual income (income over £200,000).

One of our best tips for self-employed workers would be to consider paying voluntary National Insurance contributions. Your record of paying National Insurance will be used to calculate how much State Pension you are entitled to receive when you retire.

If you have any gaps in paying National Insurance, this could mean that you don’t have enough ‘qualifying years’ to be able to claim State Pension. Reasons that you might have National Insurance gaps include:

  • You were employed but with low earnings (didn’t need to pay National Insurance)
  • You were living or working outside of the UK
  • You were unemployed (doesn’t apply if you were claiming benefits at the time)
  • You are self-employed but small profits mean that you don’t need to pay National Insurance
  • You have been on maternity or paternity leave

Paying voluntary payments now can make a big difference to how much pension you will receive – and you can pay now to cover National Insurance gaps from as far back as 2006! You’re going to need to act quickly to make the most of these voluntary payments though, as from April 2025 you can only cover gaps in payments from 2019 onwards.

Note: An important date for Self-employed workers to remember is April 5th. This is because they will also need to submit a self-assessment tax return, which they can fill in any time after this.

For anyone with an Individual Savings Account (ISA), you only have one more week to add to your account before you will miss out on this year’s Annual ISA Allowance. You can add up to £20,000 to a Stocks and Shares ISA, and up to £4,000 in a Cash ISA, Lifetime ISA, or Innovative Finance ISA.

You need to make sure to ‘use it before you lose it’ when it comes to Annual ISA Allowances, as once April 6th happens you will then be within the 2025 financial year.

Our Money Mum top tips about Cash ISAs also include:

  • Don’t forget to pay into any Junior ISA’s that you have set up for your children. The Annual Allowance for these will also run out on 6th April, and you can currently still add to the account (up to £9,000 maximum per year).
  • 16- and 17-year-olds can currently have both a Junior ISA and an Adult ISA due to some helpful loopholes. This loophole won’t apply as of 6th April 2024, so take advantage of this quickly to make the most of the Annual ISA Allowance (boosted to £29,000 due to the Junior Allowance being £9,000 per year)

You might not be aware that you can use some of your partner’s Annual Tax Allowance if they don’t use the full amount. This can be backdated for up to 5 years too, so it’s definitely a good idea to check if you have both used your entire allowance for each year.

You can claim up to £1260 of your partner’s tax-free allowance this year and many people don’t realise that this is possible. As our Money Mum Caz has said, this could potentially save you £252 on this year’s tax bill as long as you act quickly.

Some of the main rules to know about Marriage Allowance are:

  • You can transfer £1,260 of your Personal Tax Allowance to your husband, wife or civil partner each year
  • To do this, the lower earner will need to be a non-tax payer (earns less than £12,570 per year)
  • The transfer works by giving the partner who receives the extra allowance a ‘Tax Credit’ of £1,260 on their taxable income
  • You will need to apply for Marriage Allowance, as it isn’t something that is applied automatically
  • The partner who is on the higher income must be paying Income Tax as the ‘basic rate’ – this will usually be the case if they earn between £12,571 – £50,270 per year
  • For Scottish taxpayers, your partner has to be paying the starter, basic or intermediate tax rate (income of between £12,571 – £43,662)
  • Your claim can be backdated up until 5th April 2019, if you were eligible for Marriage Allowance during those years
  • You can claim the backdated allowance, even if your partner has died since 5th April 2019. You will need to call the Income Tax helpline to arrange this.
  • Be aware – Once you have applied for Marriage Allowance, your Personal Allowance will transfer over to your partner automatically until you cancel it. If you separate or your income changes, you will want to cancel your Marriage Allowance.

You can apply for Marriage Allowance on the Gov.uk website here: Apply for Marriage Allowance Online

Note: For any couples where one or both partners were born before 6th April 1935, it can be better to apply for Married Couple’s Allowance instead of Marriage Allowance.

If you were thinking of selling any assets (e.g. stocks, shares), you might want to do that before April 6th 2024. Currently, the first £6,000 you make in profit from these sales will be tax-free.

This is because of current rules for Capital Gains Tax, which is the tax that you pay on any profit that you make on selling an asset. This only applies if what you are selling has increased in value since you bought it, but some assets will be tax-free. You won’t need to pay Capital Gains Tax if you are under the yearly allowance of £6,000.

There are some new rules coming in after the new financial year starts, which means that the tax-free allowance with be halved to £3,000 per year from April 6th 2024. Waiting to sell for even a few weeks could mean a much higher tax bill for you, so it’s better to act sooner rather than later.

We get loads of questions sent into us around how Inheritance Tax (IHT) works and what to do to avoid it where possible. There are a few simple ways to avoid large Inheritance Tax bills, and one of the simplest things is to think about gifting some of your money.

Planning for the future by gifting some of your money and assets (your ‘estate’) now, can help your family and friends to avoid big tax bills. Every year you can give cash gifts which won’t be liable for Inheritance Tax if they are worth less than a set amount.

  • You can give gifts up to £3,000 each year (not limited to just close family members)
  • You can give gifts of £250 per person each year (up to the £3,000 limit)
  • If your children or grandchildren are getting married, you can gift £5,000 to your child or £2,500 to each grandchild

Other points to be aware of:

  • If you didn’t use your £3,000 allowance in the previous tax year, you can carry forward and gift £6,000 in the following year
  • If you died within 7 years of gifting money, this gift may be subject to Inheritance Tax. You should check with a financial advisor if you are unsure about your Inheritance Tax liability.

Another easy way to reduce your Inheritance Tax liability is by writing your life insurance policy into Trust. A Trust would separate your life insurance pay out from the rest of your estate, which can help you to avoid going above the Inheritance Tax threshold.

This doesn’t just apply to people submitting new life insurance applications, as it is possible to write your policy into Trust months or even years after buying your cover. Many consumers find it useful to ask for advice about this from a financial advisor or an experienced life insurance broker.

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