In the UK the end of the tax year is on the 5th of April. Here are some things you should do before the end of the tax year.
Use your ISA allowance
The ISA allowance is £20,000 for the 2023/24 tax year. If you don't use it, you lose it. You can split the allowance between a cash ISA, a stocks and shares ISA, an innovative finance ISA, and a lifetime ISA. You can also transfer money between ISAs.
ISA accounts are tax-free, so you don't have to pay tax on the interest you earn from a cash ISA or the profit and dividends you make from a stocks and shares ISA.
If you can fill this up before the end of the tax year.
Use your pension allowance
The pension allowance is £60,000 for the 2023/24 tax year. This allowance covers your contributions, your employer's contributions, and tax relief.
Pensions are a great way of saving on tax contributions. If you are a high earner you can put more money into your pension which will reduce your tax bill. If it can put you under a new tax bracket, you can save a lot of money and the save time you'll be saving for your retirement.
Before the end of the tax year evolute how much you have contributed to your pension and how much you can still contribute.
If you're a company director then you can contribute to your pension from your company. Check if your company has made enough profits to fill up your pension allowance.
Use your capital gains tax allowance
The capital gains tax allowance is £6000 for the 2023/24 tax year. This allowance covers the profit you make from selling assets such as shares, property, and other investments.
Next year it's going to be reduced to £3000 for 2024/25, now is a good time to sell your profits and use up that £6000 allowance before it gets reduced.
A good strategy is to sell some of your profiting assets and more this money into your ISA or pension to avoid paying tax on it in the future.
Use your dividend allowance
The dividend allowance is £1000 for the 2023/24 tax year. This allowance covers the profit you make from dividends from shares and funds. These shares and funds can be in a taxable stocks account or from your own company, all dividends are taxed the same.
Next year this allowance will be reduced to £500 for the year 2024/25.
The dividend allowance reduction is hard to avoid but if you have any large dividend paying stocks in a taxable account think about selling these and moving them into your ISA. The ISA will make sure that these dividends will continue to be tax free. This will mean looking at your stock portfolio and look at moving the dividend payers into the ISA and leaving the non-dividend payers into the taxable account.
Records
At the end of the tax year you will need to collect the information from the previous year so that you can fill out your self assessment tax return.
You will need to collect the following information:
- P60: This is a summary of your pay and the tax that has been deducted from it.
- P11D: This is a summary of the benefits you have received from your employer.
- Bank statements: You will need to collect all your bank statements for the year to see any interest you have earned.
- Dividend statements: If you have any dividend paying stocks you will need to collect the statements from these.
- Pension statements: You will need to collect the statements from your pension provider to see how much you have contributed and how much tax relief you have received.
- Capital gains: If you have sold any assets you will need to collect the statements from these to see how much profit you have made.
- Other income: If you have any other income you will need to collect the statements from these.
I normally collect this information at the very start of the tax year and keep it in a folder so that I don't have to worry about it when doing my self assessment.