Mirandus Accountants is an expert accounting and chartered tax advisory practice based in London and Edinburgh. We specialise in meeting the needs of private clients and their businesses.
ISAs
Put as much money as you can into your ISAs – the allowance is £20,000 per tax year.
Remember if you have a spouse or partner, remind them to save too as it could mean as much as £40,000 of your total income per tax year is being invested or saved tax efficiently, depending on what kind of ISA you get.
Tax benefit of ISAs?: You do not pay any capital gains or income tax on the growth of your income sitting in ISA.
Did you know?
You can put up to £9,000 per child or grandchild into Junior ISAs. It’s a great way to pass money to the next generation, tax efficiently. A parent or guardian will be required to set up the Junior ISA, but anyone can contribute to the savings.
Pensions
If you’re at the point in your life where you’re increasing your pension contributions, consider whether you can pay in the full annual allowance.
You may also be able to carry unused allowances over from the last three tax years. It’s worth checking whether you used your full allowances each year, from 2019/20 onwards.
Tax changes from April makes tax wrappers like ISAs and pensions even more important to use in full.
If you’re coming up to retirement and thinking of making a large pension withdrawal, talk to your St. James’s Partner about spreading the withdrawal over two or more tax years. This will minimise your Income Tax liability.
If you’re a high earner, you may be able to bring your taxable income down by putting more money in your pension or making charitable donations. These can: Bring your income down below the additional rate tax band, which starts at £150,000, and is being reduced to £125,140 after this tax year. Help you hold on to your Personal Allowance, which is slowly withdrawn once you earn over £100,000. Help you hold on to your Child Benefit, which is gradually withdrawn if one parent in the household earns more than £50,000.
Capital Gains, Inheritance tax & Dividend taxes
Take advantage of your annual Capital Gains Tax (CGT) exemption. After 5 April, your CGT exemption will drop from £12,300 to £6,000. From April 2024, it will be cut again to £3,000.
Use this tax year-end opportunity to gift up to £3,000 this year. This will mean that it isn’t included in the value of your estate, and so won’t be liable for Inheritance Tax.
If you own a business, consider taking dividend income instead of salary. In this tax year, the first £2,000 of dividend income is tax free. But from 5th April, the allowance will be halved to £1,000 and again to £500 from April 2024. You may also be able to minimise National Insurance contributions (NICs) too.
Enterprise Investment Scheme (EIS)
EIS is designed so that your company can raise money to help grow your business via high net worth individual investments.
There are tax incentives for both individuals and the investor(s), who buy new shares in your company.
Under EIS, you can raise up to £5 million each year, and a maximum of £12 million in your company’s lifetime. This also includes amounts received from other venture capital schemes.
Tax benefits:
Investors can receive initial tax relief of 50% on investments up to £100,000 on the SEIS shares. If the shares are disposed of at a loss, you can elect that the loss be set against any income tax of that year or of the previous year.
Any gain is Capital Gains Tax (CGT) free if the investment is held for at least three years. 50% of capital gains are exempt from CGT if it is re-invested in a SEIS-qualifying company.
An investment in an SEIS-qualifying company should benefit from 100% relief from inheritance tax, provided the investment is held for two years and at the time of death.