Keep an eye on your income for 2023-24

As you may be aware, the tax year 2023-24 concludes on April 5, 2024. Following this date, the majority of opportunities to optimise your tax arrangements expire, necessitating action to mitigate your tax liabilities before this deadline.

Therefore, we have less than two months to organise our affairs.

Outlined below are some key considerations to help you leverage legitimate tax allowances and reliefs and minimise your tax exposure for the 2023-24 fiscal year:

  • If either you or your partner receive Child Benefits and either of your anticipate exceeding £50,000 of income this tax year, you may be subject to the High Income Child Benefit Charge. Essentially, for every £100 your income surpasses £50,000, you’ll be required to repay 1% of the Child Benefits received. This means that once your highest income reaches £60,000, the entire Child Benefit amount will be recouped. Repayments are processed through self-assessment, which means you will have to register with HMRC if you haven’t already done so.
  • Once your aggregate income surpasses £50,270, you’ll be subject to a 40% income tax rate. Additionally, significant dividend income will be taxed at 33.75% for any portion exceeding £50,270, rather than the standard 8.75%.
  • Should your income exceed £100,000, your £12,570 personal allowance will decrease by £1 for every £2 of income above this threshold. Consequently, once your income reaches £125,140, you’ll lose your personal tax allowance entirely. Given the 40% income tax rate and the reduction in personal allowance between £100,000 and £125,140, the effective tax rate within this bracket becomes a substantial 60%.

While these pointers offer insight into potential considerations for reviewing your income tax for 2023-24, it’s also advisable to explore strategies for minimising capital gains tax, inheritance tax, corporation tax, VAT, and National Insurance.

Act promptly. If your tax affairs warrant a review, please pick up the phone so we can help you consider your options before the tax planning curtain closes, for most of us, on 5 April 2024.