New Tax Year Spring-Cleaning Tips

Spring: the sun is shining, the gardens are coming to life again - and so are your tax advisors!

That’s right, a new tax season is here, which is an excellent opportunity to review your existing processes and investments to see how you can save more of your hard-earned cash.

We’ve got the lowdown on what to do if you’re considering giving your finances a bit of a spring clean and how you can make your income and assets as tax-efficient as possible. Your accountant is your trusty partner during the process, so don’t be afraid to consult with them.

Without further ado, let’s get into how you can make the most of the new tax year.

Organise your financial records

Been living with receipts and invoices everywhere in the home office? Then this is the year to get organised with your financial documents. Creating a dedicated filing system and keeping everything up-to-date throughout the year makes tax return season ten times easier for you and your tax advisor.

You might even decide this is the tax year you’re going onto the cloud - a good move, given Making Tax Digital is on the way. Digital storage and cloud services make life easier when it comes to tax season, but be sure to keep hold of any physical receipts for your records.

Check your PAYE code

Sometimes the little things make a difference, like double-checking your PAYE code. Perhaps you’ve moved jobs or started up a side hustle (in which case, you’d better be registered for Self Assessment!) and your tax code has changed.

Doing a quick check now on the HMRC portal (or asking your accountant to check it for you) can save on monthly over-deductions or worse, the dreaded underpayments that leave you with a big tax bill at the end of the year.

Check your Gift Aid contributions

Gift Aid contributions maximise tax relief if you’re a higher or additional rate taxpayer. The 45% rate now kicks in at income levels £125,000 or higher rather than the previous £150,000 level.

If you pay tax above the basic rate, you can claim the difference between the rate you pay and the basic rate on your donation. For instance, if you donated £100 to a charity and the charity claimed Gift Aid to make your contribution £125, you can then claim the £25 as an additional tax relief on your donation.

Get your ISA sorted

Each tax year the ISA annual allowance resets and you can add an additional £20,000 into your savings tax-free. According to the Evening Standard, one super keen saver had already maxed out their 2023/24 ISA allowance within six minutes of the new tax year!

You don’t need to be as quick off the mark, but it’s well worth consulting with your tax advisor on how best to make the most of your tax-free savings options. That way by the time the 2024/25 tax season rolls around, you could be even faster with maxing out those allowances. Ready, set…

Consider big life changes

Getting married this year? Congratulations - and don’t forget to let your accountant know! If there are any significant life changes on the horizon like marriage, kids or buying a house, you may have new tax-efficient options to take advantage of.

Your accountant can advise you on junior ISAs, marriage property transfers and other allowances - plus they’ll be up-to-date on the latest news and developments so you don’t need to worry.

Check your investments

It’s worth looking at your portfolio and whether the tax implications of holding them, such as Capital Gains Tax and dividend tax rates, are still worth it for your personal situation and risk tolerance.

The CGT and dividends allowances are subject to the occasional change. Your accountant is well-placed to advise on the best path forward for your investments, whether adding more funds into a pension scheme, using Lifetime ISAs or other tax reliefs for your specific circumstances.

On that note, if you plan on making an EIS/SEIS investment this tax year then the income tax relief can be carried back to the previous tax year. It’s a generous tax saving that’s well worth taking advantage of.

Final thoughts

It can feel daunting, but refreshing your finances ready for the new tax year can pay off in spades and make a big difference in your financial wellbeing. With these tips you and your tax advisor can work together to create yourself a stress-free financial future.

Stay informed about tax legislation changes and chat with a professional accountant to maximise your financial opportunities while minimising tax liabilities. 

At BXD Accounting, we know a thing or two about the changing tax environment - just get in touch to see how we can help you keep on top of your tax affairs.