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It’s a brand-new year, and whether you’re looking to streamline your business or give your personal income a boost, it’s a good time to reassess your finances.

One simple way to save money and increase your revenue is through better tax planning. Read on, to find out how you can reduce your tax bill and make the most of your finances in 2024.

Making the most of your ISA allowances

One tried and tested way to shave a little off your tax bill is by investing in an individual savings account (ISA). In the current tax year, you can save up to £20,000 in a cash ISA, stocks and shares ISA, or an innovative finance ISA (or a combination of all three) without paying a penny in tax.

At the end of the tax year, your ISA will simply roll over, and as long as you keep your money in an ISA account, you’ll continue to reap the benefits.

If you’re looking for a longer-term investment, you might consider putting your savings into a Lifetime ISA.

You can pay in up to £4,000 each year (which will come out of your annual ISA allowance), and as an added perk, for the 2023/24 tax year, the government will add a 25% bonus to any funds you deposit, up to a maximum of £1,000.

It’s worth noting that you must be under the age of 40 to qualify, and you can only make payments into your Lifetime ISA until your 50th birthday.

Making regular pension contributions

Whether you’re a small business owner or you’re just looking to maximise your personal finances, making regular pension contributions can bring big tax incentives.

For employers, any money you pay into your staff’s workplace pension is tax-exempt. Because of the generous tax breaks involved, it’s not uncommon for companies to offer pension contributions in lieu of a bonus or pay rise.

There are some limits that you may need to consider, so it’s always worth taking professional advice before you do so.

For employees, too, it’s a win-win. You can top up your employer’s contributions from your own pocket and you won’t have to pay any tax on your pension savings up to the current annual allowance of £60,000 (or 100% of your relevant UK earnings).

What’s more, you can carry forward any of your unused annual allowance from the previous three years.

Tax planning with your spouse or civil partner

Marriage is one of life’s major milestones, but did you know it brings its own set of tax breaks? For one, once you tie the knot, you’ll be eligible for marriage allowance.

In effect, a marriage allowance enables the lowest earner to transfer £1,260 of their personal tax allowance to their husband, wife or civil partner. There are certain stipulations, but if you qualify, you could reduce your annual tax bill by £252.00.

As a married couple, you’ll also be able to reduce your Inheritance tax bill. Should the unthinkable happen, any monies or assets you leave to your better half will be exempt from Inheritance tax. If you’re unmarried, the surviving partner could be hit with a whopping 40% tax bill.

You can also transfer assets between yourself and your spouse, without being liable for tax.

For example, if you’re a higher-rate taxpayer and your spouse is paying tax at the basic rate, by transferring certain assets into their name, such as rental property or shares, you could take a big slice off your Capital Gains tax.

That’s because any rental income or dividends your spouse receives will be charged at the basic rate of 10%, instead of the higher rate of 40%.

Tax planning for your business

As a small business owner, the new year brings new opportunities and fresh challenges, and, as the current tax year draws to a close, it’s a good time to reassess your company structure.

One simple way to streamline your operations and boost your profitability is through strategic tax planning.

At Wisteria, our tax specialists can help you perform a thorough financial health check. We can assess your turnover with a view to VAT registration, advise you on the pros and cons of trading as a limited company, and ensure you’re not paying a penny more in tax than you need to.

We can even help you prepare budgets and forecasts to secure additional funding or attract angel investors.

Speak to the professionals

Tax planning can be a tricky process, whether you’re dealing with your own personal finances or running a small business.

If you’d like to talk to us about tax planning, or if you have any other accountancy questions, please don’t hesitate to get in touch.

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