Keep an eye on your income for 2023-24

Keep an eye on your income for 2023-24

As you are probably aware the 2023-24 tax year ends on 5 April 2024. After this date, most of the opportunities to arrange your tax affairs in the most advantageous way end and action to reduce your tax payments must be taken before this date.

Accordingly, we have less than two months to get organised.

We have listed below a few of the trigger points that you need to keep your eye on to maximise the use of legitimate tax allowances and reliefs and keep your tax footprint for 2023-24 to a minimum.

  • If you or your partner have claimed Child Benefits and either of your income’s are likely to exceed £50,000 this tax year, you may become subject to the High Income Child Benefit Charge. Effectively, for every £100 your income exceeds £50,000 you will be asked to repay 1% of the Child Benefits received. Which means when your highest income reaches £60,000 all of the Child Benefit received will be clawed back. The claw back will be made via self-assessment. If you are not registered for self-assessment, you will need register.
  • Once your combined income sources exceed £50,270, you will become subject to income tax at 40%. Also, if you receive significant dividend income, dividends that form part of any excess income above £50,270 will be taxed at 33.75% not 8.75%.
  • If your income exceeds £100,000, for every £2 your income exceeds this amount your £12,570 personal allowance will be reduced by £1. Which means when your income reaches £125,140, you will no longer be entitled to as personal tax allowance for income tax purposes. And, as you are paying income tax at 40% and reducing your personal allowance between £100,000 and £125,140, your effective rate of tax in this band is an eye watering 60%.

These three pointers will give you some idea of the issues you may need to consider in order to review your income tax for 2023-24, but there are also a raft of issues that it may benefit you to look at to minimise capital gains tax, inheritance tax, corporation tax, VAT and National Insurance.

Don’t delay. 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.