YEAR-END TAX PLANNING 2022-23

• Personal allowance – ensure that you have made use of your personal allowance. If your spouse has not used their allowance, it may be possible to pay them a salary for tasks they have performed for your business in order to utilise their allowance. A contract should be drawn up and the rate of pay must be reasonable for the tasks performed.

• Pension contributions – your taxable income will be reduced for contributions paid prior to 5 April 2023. Maximum contribution is lower of £40,000 or 100% of your earned income.  You can make use of unused relief from the previous 3 years.  The maximum contribution is tapered for those earning in excess of £240,000, with a minimum contribution allowance of £4,000.

• Lost personal allowance – if your taxable income is in the range £100,000 to £125,000 then you will lose £1 of personal allowance for each £2 of income in excess of £100,000, which represents a very high marginal rate of tax. By paying pension contributions (see above) or Gift Aid donations, you can reduce your taxable income and regain your personal allowance.

• ISA allowance – You can invest up to £20,000 in an Individual Savings Account (ISA). The funds can be invested in cash or shares.  Income (interest and dividends) and capital gains are tax-free.  An ISA can be cashed in at any time, subject to the rules of the ISA you choose.

• Capital gains tax – There is an annual CGT exempt amount of £12,300. If unused, this allowance cannot be carried forward.  You should review gains on investments and consider realising gains sufficient to utilise this allowance.