Want to buy some stuff?
Note – This tip applies only to business owners with a financial year that ends on either 31st March or 5th April 2023
- If you know you are going to be investing in new equipment in the next few months, consider bringing forward that expenditure into this current tax year.
- The tax ‘line’ will be drawn at the end of the tax year, and your next tax bill will be calculated from figures up to and including that tax year end date (either 31st March or 5th April).
- Your tax bill is based on your profits for the year. Bringing forward expenditure on items such as equipment will have a direct impact on these profits, and therefore reduce your next tax bill!
Selling ‘the big stuff’
Capital Gains Tax generally kicks in when you are Selling the Big Stuff. You need to consider this if you are disposing of any ‘capital’ items such as:
- Shares
- Investment properties
- Crypto
- If so, it is worth considering disposing of at least one before the end of the tax year. You have a (tax) yearly allowance that you can offset against your gains. So, splitting disposals across tax years can be efficient.
- It’s important to note that this Capital Gains allowance is £12,300 (22-23 tax year). However, this allowance is being aggressively slashed over the coming tax years, down to £6,000 from April 2023 and £3,000 from April 2024. That’s a huge drop.
Maximise your savings and investments
- Most people get at least £500-£1000 of interest a year tax free. If you are likely to exceed this amount in interest, consider putting your savings into an ISA if tax saving is a goal for you.
- The annual contribution limit for a cash and/or stocks and shares ISA is £20,000 total per tax year. There is also a stocks and shares ISA which can be popular with investors.
Getting old and have some cash to burn?
- Consider gifting cash to your loved ones. You can do this for up to £3,000 per year by using your “annual exception”, and it won’t be counted as part of your estate for inheritance tax (IHT) purposes. The gift is tax-free for the recipient too.
- If you haven’t done this before, you can also bring forward last year’s unused annual exemption (but only for one year). This gives you a potential £6000 to distribute.
- There are also other allowances that might be of use.
It’s good to talk
Ask your accountant or talk to your financial advisor on how to make the most of any tax year end benefits that might apply to you.
