TIME is running out to make some crucial decisions and save cash before the current tax year comes to an end.
Friday, April 5 is the last day to tap into perks for the 2023/24 year from the government.
GettyThe tax year will end in just a few days and there are several moves you need to make[/caption]
Extra pensioner payments and first-time buyer bonuses are among the benefits – worth thousands of pounds – that are up for grabs.
There are also a stack of tax changes that will come in when the new tax year starts on April 6, including a rise in the state pension and higher Universal Credit payments.
Alice Haine, personal finance analyst at Bestinvest, said: “Not all tax allowances can be transferred on to the next financial year, so it really can be a case of use it or lose it.
“And don’t leave it to the last minute to top up an ISA or pension.
“Your online provider may need time to process your application or add the funds.
“Trying to maximise an ISA allowance at 11.55pm on April 5, for example, could go horribly wrong if a technical glitch prevents funds from clearing in time.”
Here’s what you need to do TODAY before the end of the tax year ends to avoid missing out on money you’re owed.
Use up your ISA allowance
Savers will want to make the most of their ISA allowances before the end of the tax year.
An ISA (individual savings account) is a type of savings account where you don’t pay any tax on interest earned.
Each year you get an allowance which is the total amount you can save into it each year to take advantage of this tax benefit.
You can typically save up to £20,000 each year into an ISA and if you don’t use it up you can’t carry it over to the next year.
Alice said: “To take advantage of your existing £20,000 allowance, simply open a new ISA or top up an existing account and fund it with as much as you can afford to.”
First-time buyers saving into a Lifetime ISA (LISA) can save up to £4,000 into this account each year tax-free.
The huge benefit of ISAs is that you’ll pay no income tax or capital gains tax on the interest you earn in the account, dividends paid to you and profit made by selling investments held in the ISA.
Use up your child’s ISA allowance
Junior ISAs, known as JISAs for short, are savings accounts for kids that work in the same way.
But the amount you can save into one tax-free each year is lower, at £9,000.
Alice said: “Remember, regular bank or building society accounts may work well for a child saving up for a new gadget or bike.
“But for bigger, longer term financial goals such as funding a gap year, university fees or even a first car or property deposit, a Junior ISA is a better option.”
It really can be a case of use it or lose it
Alice Haine
Top up for retirement
Even if retirement seems a long way off, it’s worth taking advantage of your annual allowance.
This is the amount that you can save in a pension pot in a tax year before you must pay tax.
This is currently £60,000, or 100% of earnings, whichever is lower.
You may also be able to carry forward any annual allowance that you did not use from the previous three tax years.
Alice said: “Pensions have the added benefit of ‘carry forward’ rules where savers can max out unused allowances from the previous three tax years once they have made full use of their current year allowance.
“A large bonus, for example, can be put to work in a pension, with a saver potentially able to make a gross pension contribution of up to £180,000 before the end of this tax year on April 5.”
How do I file a tax return?
TO file a self assessment tax retun, you’ll need to register with HMRC first, which will then issue you with a Unique Taxpayer Reference (UTR).
You must register for self assessment by October 5 if you have to file a tax return and you have not sent one before.
You can do so by visiting www.gov.uk/register-for-self-assessment.
If you’ve previously registered and already have a UTR, you don’t need to go through this step again.
Once you’ve got your UTR, you can sign in via the “Self Assessment tax return” section of HMRC’s website by visiting www.gov.uk/log-in-file-self-assessment-tax-return.
You can then file your self assessment tax return online.
The deadline for sending a return online is January 31 every year.
If you need a paper copy of the main Self Assessment tax return, call HMRC on 03000 200 3610 and request an SA100 form.
The deadline for sending a return using a paper form is October 31 every year.
You need to pay the tax you owe by midnight on January 31 each year.
HMRC accepts your payment on the date you make it, not the date it reaches its account.
File late and HMRC will issue you with a fine.
Check your child benefit
Child benefit will be worth £25.60 a week for your first or eldest child from April 6, then £16.95 for each child after that.
Watch out for the High Income Child Benefit Charge though, as you lose all child benefits when you earn over £80,000.
The charge currently kicks in at £60,000 but this is changing on April 6 too following the Spring Budget.
Meanwhile, anyone earning over £60,000 has to pay back a portion of the money in the form of extra income tax.
A change in situation, such as a salary increase or new partner, could change entitlement to child benefits because of these rules.
This can result in a big bill to repay, even adding up to thousands of pounds for some families.
Before the end of tax year if you find you earn over this amount it could be worth looking at ways to reduce your taxable income within the rules.
For instance, putting money into a workplace pension or using employer salary sacrifice schemes can reduce your taxable income without losing money.
Salary sacrifice is an agreement to reduce an employee’s cash pay for non-cash benefits, like childcare vouchers or cycle to work scheme.
But Alice said there are things to consider if you decide to do this.
She said: “Salary sacrifice may give your pension a healthy boost, but agreeing to a lower salary could impact your ability to access credit, such as a mortgage, as you will have a lower income to play with.
“Plus, employee benefits such as life cover, and holiday, sickness and maternity pay may also be affected so ask your employer for a personalised calculation of how the scheme will affect your take-home pay and benefits.”
Check if you can claim tax relief on work expenses
If you’re spending money on things because you have to for your job, you may be able to get tax relief in a few ways.
During the pandemic government allowed everyone working from home to claim tax relief on some of their costs, including business phone calls and energy bills.
This year the rules go back to normal and you won’t be able to claim unless your job requires you to live far away from your office or there is no office.
It is still worth checking if you can claim as you may be able to get 20% of your costs back.
Check the government website to see if you can claim for this and other work expenses including mileage, specialist equipment and more.
Check your entitlement to the marriage allowance
Couples across the UK who are married or civil partnered could get tax back thanks to the marriage allowance.
You can transfer up to a maximum of £1,260 of your tax-free personal income allowance to your partner each year so long as one of you doesn’t earn more than £12,570 a year and the other pays basic rate tax.
If you claim the maximum, that would save you £252 on your joint income tax bill this year.
You are also allowed to backdate your claim for up to four years as long as you meet the criteria.
This would net you an extra £1,004 in tax savings bringing the total amount you’ve got back up to £1,256.
You have until Friday – the end of this tax year – to backdate a claim for any year you were eligible back as far as April 5, 2019.
Check your tax code
If your code was wrong and you overpaid tax in the 2019-2020 tax year you’ll need to have claimed it by today or miss out.
Tax code mistakes can happen if you change jobs or started receiving benefits and it’s up to you to spot any error and tell HMRC.
The Sun exclusively revealed that millions are overpaying an average of £689 to HMRC.
There’s a limit of four years on claiming back overpaid tax, so it’s your last chance to fix any errors and get money back for 2019-20.
Here’s how you can claim a rebate from HMRC if you think you’re owed tax back.
Use up your capital gains tax allowance
Capital gains tax is charged on the profit you make when you sell something that has gone up in value, such as stock and shares, artwork or even a second home.
For the 2023/2024 tax year, the Capital Gains tax-free allowance is £6,000.
This figure is set to half in the new tax year (2024/2025) to £3,000.
This means it might make sense for some people to sell their assets before the April 6 deadline, rather than wait.
If you’re planning on selling something and the profits could be over this amount, cashing in at the right time can keep profits below the threshold or reduce your capital gains tax bill.
For example, cash in stocks and shares in two transactions over this and next tax year rather than in a single transaction.
Get organised
Stevie Heafford, a tax partner at HW Fisher, said: “The start of a new tax year is an excellent opportunity for individuals to take a fresh look at their finances and plan for the year ahead.”
Creating a budget for household income and expenses won’t make anything cheaper, but it can help you feel more in control of your money.
Below are some important tax dates for your diary to help you keep on top of your finances:
Deadline for the second self assessment “payment on account” – July 31
Deadline to register for self assessment with HMRC – October 5
Deadline for paper self assessment returns – October 31
Deadline for online self assessment return – January 31, 2025
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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