Year-end tax planning is crucial for individuals and businesses to optimise their financial strategies, minimise tax liabilities, and take advantage of available allowances and incentives before the end of the tax year. For those looking to optimise their year-end tax planning for 2024, there are several considerations to be made following the Spring Budget announcement:

Investing tax efficiently

• Consider using your £20,000 ISA allowance for the year.  
• Do you wish to take advantage of the tax incentivised investments including EIS, SEIS or VCTs?  All offer generous tax advantages but the downside is they are high risk investments. 
• Top up your pension savings. The annual allowance (the maximum you can save into pensions in any one year) increased from £40,000 to £60,000 for 2023/24 and the lifetime allowance was abolished. This gives greater opportunity to build up your pension pot. 

Capital Gains Tax (CGT) 

• The CGT Annual Exemption for 2023/24 is £6,000 per person and will reduce to only £3,000 from 6 April 2024. Check to see if you have made full use of your available exemption.  
• Transfers of capital assets between married couple and civil partners can be made free of CGT. Take advantage of this to maximise use of both of your annual exemptions.  
• If you have more than one home, you can elect which is to be your main residence for CGT purposes. There is a two-year time limit for making elections so make sure you don’t miss out.  
• Be careful if you are investing in crypto assets. HMRC usually treat trading in crypto assets as a personal investment subject to CGT. Moving money between different crypto assets is a disposal and acquisition and will crystallise a gain or loss.  

Retaining your tax allowances 

• Your personal income tax allowance is reduced by £1 for every £2 that your income exceeds £100,000. Pension contributions and Gift Aid payments can be deducted in arriving at your total income for this purpose and can be used to help preserve your personal allowance. 
• A dividend allowance of £1,000 is available to everyone regardless of their total income. This is reducing to only £500 from 6 April 2024.  

Child benefit 

Are you affected by the high-income child benefit charge (HICBC)?  For the 2023/24 year the HICBC effectively claws back child benefit if either of a couple’s income exceeds £50,000. The chancellor recognised in the budget that this treats couples with similar amounts of income unfairly where one party to the couple is the majority earner. Whilst changes are being made to address this, for 2023/24 a couple with a more equal income spread can benefit.  

Basis period reform for unincorporated businesses 

New rules requiring unincorporated businesses to report taxable profits on a tax year basis have been introduced, with the 2023/24 year being a transitional year. This could have a significant tax impact for businesses which currently declare profits for a period other than the tax year.  If you haven’t already planned for this change it is still not too late to do so. 

VAT on school fees 

It is widely anticipated that VAT will be introduced in school fees in future. Your children’s school may already be in communication with you on this topic. Keep in touch with them as there may be opportunities available to help mitigate against this increase.