It is important consider your pension contributions, salary sacrifices and Capital Gains Tax allowances for you to receive the right benefits for you.

There are range of tax-free allowances you should consider using before the end of the tax year on 5 April and this is detailed below.

Personal allowance and dividends

The first £12,570 of your income is covered by your personal allowance and is received tax-free unless your total income exceeds £100,000.

An additional £1,000 of dividend income is covered by dividend allowance (if not already covered by the personal allowance).

This means there is no tax to pay.

If you are a basic rate or higher rate taxpayer, you can also benefit from the personal savings allowance.

This means the first £1,000/£500 (respectively) of interest is free from tax.

Capital Gains Tax

It is important to consider and use the Capital Gains Tax (CGT) annual exempt amount.

This will mean you could receive up to £6,000 of capital gains completely tax-free.

You could potentially use this to further re-invest the gains.

You do need to know that, from April 2024, the amount will reduce to £3,000 per annum and, if you do not already do tax returns, you will need to if your gains exceed £3,000 in future years.

ISAs

Using an ISA would mean you automatically get zero interest on up to £20,000 worth of interest.

These are a great way of making investments as they allow you to make full use of the annual limits for contributions to your ISAs.

Any growth, income, and gains within these are again completely tax-free.

The annual maximum amount for an adult, that can be saved in ISAs, is £20,000 in a combination of ways through stocks, shares, innovative finance, or cash.

If you have children, they can have a junior ISA with a maximum of £9,000, up to the age of 18.

Pensions

There is sometimes confusion surrounding the rules of pensions but, when properly understood, they can be another way to reduce your tax liability.

You can use up your personal allowance for pension contributions – the amount you put in which largely depend on the amount of your income for the year, what the income is, and what unused allowances you have from the three prior tax years.

At a minimum, you can make pension contributions of up to £3,600 (gross) in the year and an annual allowance of up to £60,000.

Contributions to your personal pension will also reduce your adjusted net income thus there might be benefits if your income is between £100,000 and £125,140.

This applies where the personal allowance is reduced or for those with income between £50,000 and £60,000 who are subject to the High Income Child Benefit Charge (HICBC).

Always remember to take care with your pension contributions so as not to exceed the annual allowance.

It is crucial to maximise your tax allowances whilst they are still around.

If you would like to make the most of your tax-free allowances before 5 April, get in touch with a member of our team today.

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The two main changes impacted:

• Capital Gains Tax (CGT) on most property disposals
• Furnished holiday lettings

It is important you understand these changes, when they come into effect and how you will be impacted so you can ensure you remain compliant with your tax obligations.

How is my CGT obligation changing?

As long as the property is not your main residence, any residential property you sell for a gain is liable for CGT.

Usually, residential property gains would be taxed at 18 per cent for gains that fall within the basic rate band and then 28 per cent thereafter.

However, from 6 April this year, the higher rate will be reduced to 24 per cent – this affects property sales that are exchanged on or after this date.

You need to submit property returns but you also need to be aware that any forms submitted from 6 April may still be required to use the 28 per cent rate if the sale was exchanged on or before 5 April.

This is due to the 60-day reporting requirement and is important to know so you are up to date with your tax obligations.

To remain compliant with your CGT obligation, you should:

• Report gains online
• Pay the tax within 60 days if the completion date was on or after 27 October 2021; or
• Pay the tax within 30 days if the completion date was between 6 April 2020 and 26 October 2021

When you complete the tax return, you need to show the disposal proceeds before any deductions.

After this, you can claim the cost of buying the assets and broker fees as allowable costs.

If you are a landlord, you will be able to benefit from the lower rate of CGT on property disposals if you choose to sell your property after 6 April.

This is due to the abolishment of the Furnished Holiday Lets preferential tax regime from April 2025 which is discussed below.

Will my furnished holiday letting be affected?

From 6 April 2025, the Furnished Holiday Lets preferential tax regime will be abolished.

As a result, your furnished holiday letting will be treated as a property investment business from 6 April 2025.

However, the decision to abolish this regime means the following tax benefits of being treated as a trade will be lost from 6 April 2025:

• Interest for businesses operated by an individual will cease to be a deduction and relief will instead be given as a 20 per cent tax credit from the individual’s tax liability. If you are a higher rate taxpayer, you will receive a reduction in tax relief for interest to the 20 per cent rate
• Expenditure on qualifying assets will not be eligible for capital allowances from 6 April 2025 although you might be able to instead claim a deduction from profits for the cost of replacing domestic items
• If you rely on profits of your furnished holiday lettings business to support obtaining tax relief for their pension contributions, you will need to seek our expert advice as your profits will no longer be treated as relevant earnings from 6 April 2025

To help combat these changes, you will need to evaluate your business operations and ensure you are compliant with your tax obligations as a property owner.

If you would like to know more about the changes and how you will be affected, please get in touch with a member of our team today.

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It’s the gain you make that’s taxed, not the amount of money you receive.

As we approach 2024, individuals and businesses in the UK should understand the implications of CGT and explore ways to minimise its impact on their finances.

This article aims to provide you with practical strategies to reduce your CGT liability in 2024, alongside an overview of upcoming CGT rates for the year.

Understanding CGT rates for 2024

Before looking at reduction strategies, it’s important to understand the CGT rates for 2024.

CGT rates can vary depending on the type of asset and your income tax band. For the tax year 2024, the rates are as follows:

• 10 per cent (18 per cent for residential property) for your entire capital gain if your overall annual income is below £50,270.
• 20 per cent (28 per cent for residential property) for your entire capital gain if your overall annual income is above the £50,270 threshold.

Remember, these rates are subject to change based on Government announcements, so always check for the latest information.

Utilising tax-free allowances

One of the most straightforward ways to reduce your CGT is to make use of your annual tax-free allowance.

In 2024, every individual in the UK has a CGT allowance, meaning you can realise gains up to a certain amount without paying any CGT.

For 2024, the allowance will be £3,000 for individuals and £1,500 for most trustees.

If you have unused allowance in a given tax year, consider planning your asset disposals to maximise this benefit.

Timing your asset disposal

The timing of selling your assets can significantly impact your CGT.

If you expect to have a lower income in a future tax year, it may be beneficial to delay selling assets until then, potentially placing you in a lower tax bracket and reducing the CGT rate applied to your gains.

An experienced accountant will be able to recognise where the opportunities for this strategy lie.

Transferring assets to a spouse or civil partner

Transferring assets to your spouse or civil partner can be a useful way to reduce CGT.

Transfers between spouses or civil partners are usually CGT-free, and if your partner pays tax at a lower rate than you, any future gains may be taxed at a lower rate when they dispose of the asset.

Investing in an ISA or pension

Investing in an Individual Savings Account (ISA) or a pension can offer significant tax advantages.

While you can’t transfer existing shares into an ISA, selling shares and then repurchasing them within an ISA, known as ‘Bed and ISA’, can be a strategy to realise gains in a tax-efficient manner.

Similarly, contributing to a pension can reduce your taxable income and potentially bring you into a lower CGT rate band.

The yearly pension allowance for 2024 is set to be £60,000, but again, this could change depending on Government policies.

Offsetting losses against gains

If you’ve made a loss on some of your assets, you can offset these losses against any gains you’ve made, reducing your overall CGT liability.

It’s important to keep accurate records of any losses, as these can be carried forward to offset against future gains.

Claiming relief on business assets

Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) is a significant consideration for business owners looking to reduce their CGT liabilities.

The relief can reduce the CGT rate on qualifying business assets at the point of sale.

You should ensure you meet the criteria and consider this when planning the disposal of business assets.

Investing in Enterprise Investment Schemes (EIS)

Investing in EIS-eligible companies can offer CGT relief on your investments.

EIS is designed to help smaller, higher-risk companies raise finance by offering tax relief to investors.

Gains on EIS shares are free from CGT if held for a minimum period, usually three years.

Seeking professional advice

CGT is complex and often changes depending on Government policy so we may see a new set of challenges emerge after the general election next year.

Either way, it’s always advisable to seek professional advice tailored to your individual circumstances.

A qualified accountant or tax advisor can help you navigate the complexities of CGT and develop strategies that are most beneficial for your specific situation.

Remember, every financial decision should be made considering your overall tax position and long-term financial goals.

Please speak to a qualified accountant to get help with your CGT liabilities.

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