Making the most of allowances
The 2022/23 tax year ends on Wednesday 5 April. After this date, many allowances will reset, so it could be your last chance to use some of them. Making the most of allowances can reduce your tax liability and help your money to go further.
Reviewing your finances now could mean you discover an allowance you could make use of before the deadline. Here are seven allowances to consider using before the 2022/23 tax year ends.
2022/23 allowance: up to £1,260
Using your Marriage Allowance could reduce your Income Tax bill by £252. The Marriage Allowance allows a spouse or civil partner to give some of their unused Personal Allowance to their partner.
2022/23 allowance: £20,000
An ISA provides a tax-efficient way to save and invest. The interest or returns you earn on money held in an ISA are free of both Income and Capital Gains Tax (CGT). For the current tax year, you can add up to £20,000 to an ISA.
2022/23 allowance: £2,000
Using your Dividend Allowance could be a tax efficient way to boost your income. Dividends are paid by companies to share out the profits they have made. If you hold shares in a dividend-paying company, you will receive payments. The amount you receive will usually be dependent on performance and stock price.
2022/23 exempt amount: £12,300
Using your Capital Gains Tax annual exempt amount could save you money when you sell some assets. Capital Gains Tax (CGT) is paid when you sell certain assets and make a profit. This may include stocks that aren’t held in an ISA, a second property, or personal possessions worth more than £6,000 (excluding your car).
2022/23 allowance: up to £40,000
A pension is a tax-efficient way to save for your retirement. Using your Annual Allowance could help create financial security in your later years. The pension Annual Allowance is the maximum that you can pay into your pension each tax year while still benefiting from tax relief. This includes pension contributions made by your employer or other third parties.
2022/23 exemption: £3,000
If your estate could be liable for Inheritance Tax, the annual exemption means you can pass on a gift tax-free. If you’re concerned about Inheritance Tax (IHT), gifting to loved ones now can reduce the value of your estate and, so, the eventual bill.
2022/23 allowance: dependent on your disposable income
Making gifts from your income could reduce your estate’s Inheritance Tax bill. If Inheritance Tax (IHT) is a concern, gifting from your income is another way to reduce a potential bill.
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