In April 2023 taxes rose alongside a reduction to some of our allowances, such as a reduction in the Capital Gains Tax allowances and the reduction of the amount of dividends you can earn before paying tax.

Whereas £2000 dividend income was exempt from income tax until April 2023, this reduced to £1000 from April 2023 and then in 2024 it reduces to just £500. In addition, our personal allowances remain frozen for income tax purposes which may result in you paying more tax than in previous years.

However, there are steps you can take to mitigate tax charges:

  • Utilise this year’s (2023/24) Capital Gains Tax Allowance (CGT) which is currently £6,000, this will drop to £3,000 in 2024. Consider owning assets jointly so two allowances can be used to offset CGT
  • Utilise this year’s and next year’s ISA allowance. There is no capital gains tax payable on the encashment of ISAs and you can invest £20,000 in either a cash ISA or stocks and share ISA. If you have insufficient time to invest in a stocks and shares ISA, consider utilising a cash ISA which can then be switched into a stocks and shares ISA after the end of the tax year
  • Maximise your pension contributions and receive tax relief at your highest marginal rate. Speak to your financial adviser to see how much you can contribute before the end of the tax year.
  • Look to maximise pensions for your spouse, even if they do not have an income
  • If you own a company, remember pension contributions can be used to offset Corporation Tax
  • Review your investments to ensure they are competitive
  • Look to offset Inheritance Tax charges on your estate by speaking to your Financial Adviser who can help you discover some of the ways this can be mitigated, allowing for more of your estate to be passed to your beneficiaries
  • If you are a higher rate or additional rate taxpayer or are limited to what you can pay into a pension, consider investments like a Venture Capital Trust where you may benefit from a mix of upfront and ongoing tax reliefs:   > Up to 30% upfront income tax relief   > Tax-free dividends > Tax-free growth 
For advice on anything covered within this article, please speak to your Independent Financial Adviser.

This article does not constitute financial advice and you should always speak to your Independent Financial Adviser before acting on any of the tax tips mentioned in this article.
Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.