Conquering the UK Tax Season: Your End-of-Year Tax Planning Checklist (as at Feb 2024)

The UK tax year ends on April 5th, and as we approach this deadline, it's time to take action and ensure you're prepared for tax season. By proactively planning and utilising this comprehensive end-of-year tax planning checklist, you can navigate the complexities of the UK tax system with confidence, maximise deductions, and potentially minimise your tax liability.

Gather your essential documents:

Income statements: Pay slips, P60 forms, and any forms reflecting income from self-employment, investments, or other sources.

Expenses and receipts: Maintain organised records for allowable deductions like business expenses, charitable donations, and travel costs.

Investment statements: Documents detailing dividends, interest earned, and capital gains/losses from investments.

Private pension statements: Statements outlining contributions made to personal pensions or workplace pension schemes.

Scrutinise your income landscape:

Salary and wages: Double-check your P60 form for accuracy and report discrepancies to your employer.

Self-employment income: Ensure all income from your business or freelance activities is reported, including cash payments and earnings from online platforms.

Investment income: Include dividends, interest from savings accounts or bonds, and capital gains from selling investments.

Rental income: If you own a rental property, report all rental income received.

State benefits: Include any taxable state benefits received, such as Universal Credit or Employment Support Allowance.

Unlocking the power of UK tax allowances and reliefs:

Personal allowance: Every UK resident taxpayer is entitled to a tax-free personal allowance for the tax year. Utilise this allowance to the full extent by ensuring your income falls below this threshold.

Marriage allowance: If you're married or in a civil partnership and your partner earns less than the personal allowance, you may be able to transfer a portion of your allowance to them, reducing their tax bill.

Trading allowance: If you're self-employed, you can deduct up to £1,000 of trading allowance from your taxable profits.

Gift allowance: You can give away up to £3,000 per tax year without incurring Inheritance Tax (IHT).

Maximising pension contributions:

Workplace pension contributions: You can typically benefit from tax relief on contributions to your employer-sponsored pension scheme.

Personal pension contributions: Contributions up to your annual allowance (£40,000 for the 2023/24 tax year) can benefit from tax relief. You may also be able to carry forward unused allowances from the previous three years.

Exploring tax-efficient savings options:

Individual Savings Accounts (ISAs): Contribute to an ISA (Stocks & Shares ISA, Cash ISA, or Lifetime ISA) to save for various goals. These contributions are tax-free, and any investment growth within the ISA is typically free from capital gains tax and income tax.

Junior ISAs: Open a Junior ISA for children under 18 to save for their future. Contributions are tax-free, and any investment growth is also tax-free.

Capital gains tax (CGT) considerations:

Capital gains allowance: You can benefit from an annual capital gains tax exemption of £6,000 (2023/24 tax year).

Capital losses: Utilise capital losses from selling assets at a loss to offset capital gains and potentially reduce your CGT liability.

Seeking professional guidance:

While this checklist provides a foundation, seeking advice from a qualified Chartered Accountant (ACA) or Certified Public Accountant (CPA) can ensure you fully understand and utilise all applicable tax allowances, reliefs, and opportunities specific to your circumstances.

Remember:

Tax laws can change, so it's crucial to stay updated.

Keep accurate records for at least six years after filing your tax return.

File your tax return by the deadline to avoid penalties.

By following these steps and proactively planning, you can navigate the UK tax system with confidence and potentially reduce your tax bill for the year.