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Have you made the most of your income allowances this tax year?

With the end of the 2023/24 tax year just next week on 5th April, it’s important to consider whether or not you have taken all the necessary steps to make sure your financial decisions are as tax-efficient as possible. So we want to emphasise the significance of this period as an opportunity to review and adjust your financial strategies to make sure you’ve made the most of your allowances…

Your salary and dividends for end of the 2023/24 tax year

Have you made the most of your personal allowance?

One of the first steps in tax efficiency is ensuring that you and, if applicable, your co-directors have drawn a salary that fully utilises your personal allowance. This not only maximises your take-home pay but also reduces the corporation tax your company has to pay. But have you taken the right amount?

Have you made the most of your dividend allowance?

Dividends offer a tax-efficient way to extract profits from your company. The first £1,000 of dividends is tax-free, but have you taken advantage of this allowance? Beyond this, considering the basic rate band for dividends can further reduce your tax liability.

It’s worth considering deferring further dividends until after 5 April 2024 to avoid exceeding ‘tax triggers’, where at £100,000 you start to lose personal allowances, and £125,140 where an additional rate of tax applies.

The power of gifting shares

An often-overlooked strategy is gifting shares to spouses or family members. This allows them to benefit from receiving dividends, potentially under lower tax rates, thereby increasing your family’s overall tax efficiency!

Are you fully prepared?

It’s important for you to review these areas of your financial planning at the end of every tax year to make sure you’ve made the most of your personal and dividend allowances. For personalised advice and strategies tailored to your unique situation, reach out to BK Plus.

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