To prepare yourself and your finances for the 2024/25 tax year, here’s a selection of tax planning opportunities for you to explore.
A new tax year is almost here. And, while you may not be having a New Tax Year’s Eve party on 5 April, you do still have time to think about tax planning.
So, in true New Year style, we’re counting down 10 top tips for 2024/25. They include ISAs, buy-to-let portfolios, High Income Child Benefit Charge (HICBC), electric cars and more.
10. Make the most of your ISA allowance
ISAs are free from income tax and capital gains tax (CGT). The overall ISA allowance is currently £20,000 – this doesn’t carry over between tax years, so it makes sense to use as much of your allowance as you can afford to by 5 April each year.
The limits for different ISA types are:
| ISA | 2023/24 limit |
| Cash, Stocks and Shares, Innovative Finance ISA | £20,000 a year |
| Junior ISA | £9,000 a year |
| Help to Buy ISA | £200 a month for existing accounts |
| Lifetime ISA | £4,000 a year with no monthly maximum amount |
9. Review the return you’re receiving on your capital
Whether you have funds on deposit receiving a low return, or you rent property and are affected by the reduction in tax relief on loan interest, the return on capital or annual yields should be reviewed.
Our tax experts would be happy to advise on tax aspects that may be affecting you, whilst our team at BKL Wealth Management can review and advise on your personal or family wealth and assets.
8. Explore other tax allowances for your savings
For savings held outside pensions and ISAs, the Government gives several other allowances. These include the Personal Savings Allowance: a tax-free allowance for interest payments. It is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers but doesn’t apply to additional-rate taxpayers. All taxpayers also receive a £2,000 tax-free allowance for dividend income.
It’s worth speaking to us to explore whether you are making best use of these allowances.
7. Use your annual tax-free allowances when making financial gifts
Each tax year you can make a range of tax-free financial gifts. These leave your estate immediately and won’t be taken into account when calculating your inheritance tax (IHT) bill.
These gifts could include:
- Gifts to your husband, wife or civil partner (as long as the UK is their permanent home)
- Unlimited individual gifts of up to £250 per person
- Unlimited payments towards the living costs of a child, elderly dependant or ex-spouse
Do you know the value of your estate? Have you considered IHT planning? We’d be happy to have an initial conversation with you. We have more information about our estate and IHT planning services here.
6. Use your annual allowance for pension contributions
Investments in your pension are free from income tax and CGT. Because of these and other tax benefits, there is a limit to the amount you can pay into your pension. Each year you can contribute as much money as you earn, usually up to £60,000 (although this tapers down to £10,000 for higher earners). You may also be able to make extra contributions by carrying forward any unused allowance from the last three tax years.
Basic rate tax relief is obtained at source and higher rate tax relief is obtained via your annual tax returns. In the right circumstances the net cost of making a contribution can be very low!
In addition to maximising the tax relief on pension contributions, our team at BKL Wealth Management would be happy to review your current mortgage arrangements. In general, pension schemes have become more efficient over time, so if you do have an older policy then we would always recommend a review.
5. Review your buy-to-let portfolio structure
If your spouse or civil partner is a basic rate taxpayer while you are a higher rate taxpayer, or vice versa, it makes sense for the lower earner to be the one who receives taxable rents from any buy-to-let properties you own. In certain circumstances it’s possible to split income to an unequal share.
A review of any borrowings on your main residence and investment property would also be worthwhile.
4. Selling or gifting residential property? Remember CGT
In 2020, CGT on property changed. This has had a significant effect on the amount of tax handed over to HMRC following a property disposal. So if you’re thinking of selling or gifting a property, we recommend you plan accordingly.
3. Plan for the High Income Child Benefit Charge
Under this tax charge, the Government recovers some or all of any Child Benefit claimed where the annual taxable income of the claimant or of the claimant’s partner (i.e. spouse, civil partner or cohabitee) exceeds £60,000.
To keep your taxable income below that threshold, you could reduce it by exchanging salary in return for employer pension contributions, or by making personal pension contributions.
2. Explore the benefits of electric cars
If you’re considering an electric or low emission vehicle for business use, the tax-related advantages are also worth exploring. They cover capital allowances, car benefits in kind (determined by the level of a car’s CO2 emissions and its fuel type) and fuel benefits in kind.
1. Review non-UK domicile (non-dom) remittances
If you’re not domiciled in the UK and you have an offshore fund in which clean capital is mixed with foreign income, foreign gains or both, you can arrange the income, gains and capital into separate accounts in order to facilitate tax-efficient remittances to the UK.
Reviewing your remittances before 5 April each year is important.
Find out about our complete UK tax service to non-resident and non-domiciled individuals here.
As announced in this month’s Spring Budget, from 6 April 2025 the non-dom tax regime will be replaced with a new relief on foreign income and gains available for the first four years of UK tax residency, with transitional arrangements. Look out for more details from us about these changes, including a webinar hosted by our private client tax and trust experts.
Finally, a bonus tip:
Speak to specialists for help with tax
Our tax and wealth management specialists are experienced at helping clients make the most of tax rules and allowances, structuring their finances tax-efficiently to ensure they don’t pay more tax than is necessary.
As well as advising you directly, we can arrange an initial consultation with one of BKL Wealth Management’s financial planners. There is no cost for this consultation – it’s an opportunity for you to discuss your specific circumstances and goals with an experienced financial planner. If you choose to take up any of their services, all costs will be agreed in advance.
For more information, please get in touch with your usual BKL contact or use our enquiry form.