Before the 2022/23 tax year comes to an end, we’ve looked at what you need to do to ensure you make the most of your tax allowance.
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The tax year deadline is fast coming to an end!
But, before it renews, there are a few things you should look into to make sure you make the most of your tax-free allowance before it renews.
You may already have everything covered, but it doesn’t hurt to double-check that you’ve not missed anything, especially as circumstances change over the months.
Let’s take a look at what you might be missing out on.
When is the end of the tax year 2022/2023?
At the end of the tax year, allowances reset, and you start over – so for things like tax-free savings and your tax code if you’re employed.
The tax year period for 2022/2023 started on 6 April 2022 and finishes on 5 April 2023.
When does the new tax year start 2023/24?
The tax year always starts on 6 April each year.
The 2023 to 2024 period starts on 6 April 2023 and finishes on 5 April 2024.
What do I need to do before the end of the tax year?
You may have nothing to worry about or anything to do, but it’s always worth spending a little time on life admin and keeping on top of your finances.
Open or transfer an ISA
Individual Savings Accounts (ISAs) allow you to save up to £20,000 a year tax-free. So, if you complete a tax return, you would not need to declare or pay tax on any interest, income or capital gains on your savings.
If you already have an ISA, you may want to transfer your money to another provider. By transferring the money, you may get a bonus, better rates of interest and potentially lower fees. Switching providers means you keep your tax-free allowance. If you withdraw the money, you won’t be able to reinvest the tax-free allowance again.
Or, if you haven’t opened one yet and have your everyday average savings in cash, you may want to consider starting an ISA.
Don’t open two of the same ISAs a year
You can save up to £20,000 split into one of each kind of ISA. So, you could have four different kinds of ISAs running at the same time.
You could save in:
- cash ISA
- stocks and shares ISA
- innovative finance ISA
- Lifetime ISA (max £4,000 a year)
However, under the ISA rules, you can’t pay into two of the same kind of ISAs in a tax year.
(For instance, you can’t have two stocks and shares ISAs at the same time, but you could have one cash ISA and one stocks and shares ISA).
Use your ISA allowance
Before the end of the tax year, if you have cash savings and have not taken advantage of the full £20,000 threshold, you may want to consider topping up your ISA to take advantage of the tax-free allowance.
If you don’t use the allowance, you can’t carry it over to the next tax year – use it or lose it!
Check you’re on the right tax code
You can use an Income Tax checker on the HMRC site to check if you overpaid in a previous tax year. You will need your P60/P45 from your employer. If you’ve overpaid, you can claim a refund.
Refunds are usually issued within eight weeks, although they are generally a lot quicker.
Get any other tax rebates
It’s not just income tax that you can get a rebate on.
You could also get a refund if you work from home, use fuel for work, pay for your own uniforms, do laundry of work clothing or have specific work tools.
Getting a tax rebate is easy; you can request it directly from HMRC. You don’t need to pay a company to do this.
There is a time limit of four years on reclaiming any tax you might be due. If you allow the 5th April tax-year reset date to pass, then you miss a year to claim.
Refunds are usually issued as tax relief by changing your tax code. Tax codes are listed on your pay slip – check out this list of tax codes and what they mean.
Use your Marriage Allowance
If you’re married or in a civil partnership, you may miss out on annual tax savings of up to £1,260.
You can backdate a claim for four years if you’ve never claimed.
To be entitled to the Marriage Allowance, the lower earner would need to have an income below your Personal Allowance of £12,570, and your partner is on a basic rate of tax.
It’s easy to check using a calculator how much tax you’d save and apply directly on the government site.
Save for your kids
If you have children, you can open a JISA (Junior ISA) on their behalf. When your child reaches 18, they get then get access to it.
While a parent or guardian has to be the one to open it, you can share account details with other family members so they can save too.
There is an annual allowance in 2022/23 of £9,000 for a JISA.
Check your will
March is Free Willis Month, so it is as good a time as any to consider if you need to get a will or make sure your is up to date.
While you don’t need to update your will in line with the tax year, if you are considering other financial decisions, it’s a bit of life admin worth going over too.
Contribute to your pension allowance
Similar to your ISA allowance, you may want to consider adding additional money to your private pension savings.
Contributions are tax-free up to set limits, so it’s worth checking your circumstances to see if you to add more to your pension pots.
Whatever you choose to do with your money, be sure to get independent financial advice.
Capital gains tax allowance
Capital Gains Tax (CGT) is a tax you must pay on any profits when you sell an asset. For instance, if you sell property (not your only/main home) or stocks/shares (not ISAs) and make a profit, you need to pay tax on how much you make on it.
You only have to pay the tax if your gain is more than £12,300 in the 2022/23 tax year. You cannot carry over your allowance into another year, so if you plan to sell an asset, it may be worth considering before the end of the tax year.
(From April 2023, it will be reduced to £6,000, and in April 2024, it will be reduced to £3,000)