End of Tax Year Financial Planning

In March's Director blog, Managing Partner of Griffith's Marshall Ian Price shares his tips on basic end of year financial planning. 


With the end of the tax year fast approaching, here are some basic planning ideas you could consider. All these are dependent on your own situation and resources


ISAs are tax efficient investments and as well as Cash and Stocks & Shares ISAs there are other types including: Junior ISAs, Help to Buy ISAs and Lifetime ISAs. The income and any capital gains generated within the ISA are tax free and no tax is due when funds are withdrawn.

The amount you can invest in an ISA differs depending on its type, but for Cash and Stocks & Shares ISAs this is £20,000 per year.

Pension contribution and charitable gifts

Making a personal pension contribution or charitable gift will increase your basic rate band, meaning if you are a higher rate or additional rate taxpayer, the contribution will reduce the income taxed at the higher rates of tax. This is an effective way of saving for the future or giving to worthy causes, whilst giving a tax benefit. 

Inheritance Tax (IHT) gifts

You can gift £3,000 per annum IHT free. If no gift was made in the 2022/23 tax year, then this can also be made before the end of the current tax year. This means that £6,000 can be gifted tax free.

Capital Gains Tax (CGT) allowance

Make use of the £6,000 CGT annual allowance because any gains below this amount are effectively free from CGT. You can also transfer shares to your spouse tax free, using their annual allowance, meaning that £12,000 of capital gains can be realised without paying any tax.

Vote dividends in your personal company

All individuals in the UK have a £1,000 dividend allowance, which allows dividend income to be received tax free. If no other dividends have been received in the year, a dividend can be voted by your personal company to use this allowance.

Capital allowances

To save tax within a sole trader business or partnership, consider investing in any necessary plant or machinery before the end of the tax year. This could attract 100% capital allowances which will reduce taxable profits and lower the overall tax bill. 

Tax efficient investments

Investments such as Venture Capital Trusts (VCT), Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS) are investments in small, unquoted trading companies. There are beneficial tax reliefs for these investments, including income tax relief in the year of investment. Also, any dividends received for VCTs are exempt from tax and EIS investments can benefit from capital gains tax deferral relief.

Marriage allowance

If income in the year is below the personal allowance, then you can transfer part of your personal allowance to your husband, wife, or civil partner as long as they are a basic rate taxpayer.

Avoid losing your personal allowance

The tax-free personal allowance for most people is currently £12,570. When taxable income is over £100,000 this allowance starts to be lost, as it’s reduced by £1 for every £2 of income over £100,000. This means that once income is over £125,140 the personal allowance is lost altogether.

There is an effective tax rate of 60% on any income over £100,000 but below £125,140, as not only is the tax rate 40%, but also the personal allowance is lost, meaning more income is subject to tax. If you’re in this position, it’s worth considering some of the other points in this blog to make sure this doesn’t happen e.g. by making a pension contribution.

Finally, always take legal advice when considering investment and tax planning.