Accounting News – Winter 2023

Year-End Tax Planning: Maximising Opportunities Before April 2024

As 2023 drew to a close, businesses and individuals faced both challenges and opportunities. With Corporation Tax changes now in force and personal allowances frozen, proactive tax planning became more important than ever.

For individuals

• Frozen thresholds – Income Tax and NI thresholds remain frozen until 2028, meaning more taxpayers are being dragged into higher rates (“fiscal drag”). Using allowances effectively is crucial.
• ISAs and pensions – The annual ISA limit (£20,000) and the increased pension annual allowance (£60,000) offer two of the most effective ways to save tax-efficiently.
• Capital gains and dividends – From April 2024, the Capital Gains Tax annual exemption will fall further, and the Dividend Allowance will be cut. Selling assets or declaring dividends before the year end could reduce tax exposure.

For businesses

• Full expensing – Still available until 2026, so investing before the year end can reduce taxable profits significantly.
• Profit extraction strategies – With higher Corporation Tax in place, directors should review whether salary, dividends, or pension contributions offer the most efficient mix.
• Employee incentives – Tax-advantaged schemes like Enterprise Management Incentives (EMIs) can help retain staff in a competitive labour market.

Why plan early?

By acting before the 5 April 2024 deadline, you can make the most of current allowances and protect yourself from upcoming changes. Waiting too long risks missing opportunities and paying more than necessary.

📞 Want to reduce your tax bill and plan confidently for 2024? Get in touch with our team today to arrange a year-end tax review tailored to your needs.