Preparing for the New UK Tax Year: Key Changes and Allowances

As the new UK tax year approaches, it's essential to stay informed about the latest changes to tax allowances and regulations. In this article, we'll outline what you need to know about tax-free allowances, incoming tax changes, and important tax dates to help you make the most of your earnings and plan your finances effectively.

Maximise Your Tax-Free Allowances

1. Personal Allowance: You can earn up to £12,570 tax-free in the new tax year. If you're married and haven't used up your full allowance, you may be eligible for the Marriage Allowance, which allows you to transfer some of your unused allowance to your spouse.
2. Sole Trader Allowance: Perfect for side hustles, the £1,000 Sole Trader Allowance lets you earn up to £1,000 without having to report anything to HMRC.
3. Rent-a-Room Allowance: Although there might not be enough time left to take advantage of this, you can earn up to £7,500 tax-free by renting a room or garage in your main home.
4. ISA Allowance: You can save up to £20,000 in an Individual Savings Account (ISA), with all interest, dividends, and gains being tax-free.
5. Pension Annual Allowance: Contribute up to £40,000 to your pension and enjoy tax relief on those contributions.

Incoming Tax Changes to Watch Out For

1. The 45% tax bracket will be lowered from £150,000 to £125,140, affecting nearly 800,000 taxpayers.
2. The capital gains tax-free allowance will be reduced from £12,300 to £6,000.
3. The dividend allowance will be lowered from £2,000 to £1,000.
4. The pensions annual allowance will be increased to £60,000, and there will no longer be a lifetime allowance of £1 million.

Important Tax Dates for the 2023-2024 Tax Year

1. If you became self-employed (sole trader or landlord) and earned over £1,000, you must register with HMRC for Self Assessment by 5th October 2023.
2. You can file your 2022-2023 tax return from 6th April 2023. It's always a good idea to file early and avoid last-minute stress.
3. The deadline to file your tax return is 31st January 2024.

By staying informed about these changes and taking advantage of tax-free allowances, you can better manage your finances and ensure you're fully prepared for the new UK tax year. Get in touch with us if you have any questions or would like to discuss.