The end of tax year, 5th April, is fast approaching. The new tax year will see an increase in the amount of tax you pay and continued impact from high inflation which means it’s vital you maximise your tax efficiencies and allowances ahead of the tax year-end.Making the most out of your current tax allowances and reliefs and reviewing your finances to ensure everything is running smoothly will go a long way in helping you stay above water with the tax increases from 6th April.I’ve put together a checklist below of things you need to be thinking about prior to the tax year-end.Take action ahead of tax increases from 6th April 2023From 6 April 2023 there are a number of tax increases:The Additional Rate 45% tax charge will apply to income above £125,140All other tax bands remain frozen until at least 2028Tax Free “Dividend Allowance” is reducing from £2,000 to £1,000Capital Gains Tax (CGT) Annual Exemption is reducing from £12,300 to £6,000Corporation Tax rates will increase up to 25%The combination of changes resulting in the increase in tax would mean that bringing forward drawings to the 2022-23 tax year could have an advantage, provided it doesn’t push you into a higher tax rate bracket.If you are already a higher rate tax payer, say your taxable earnings are around £65,000 per year, and you are wondering about drawing an additional £10,000 dividend from your limited company in the next 6 months, drawing this before 5 April 2023 could save up to £125.Make use of your pension allowanceThe general advice is that a taxpayer can pay up to £40,000 into their pension each year. You can also carry forward any annual allowance you didn’t use up from any of the previous three years.However, if you are a high earner or have flexibly accessed your pension the annual allowance available to you could be reduced as low as £4,000 due to the ‘Tapered Annual Allowance’. It may also be limited to your Net Relevant Earnings (NRE) if you are not a director receiving payments from your own Ltd company. Careful consideration should be given to any payments made as tax relief may not be available should you exceed your available allowances or if your contributions exceed your NRE.It’s also important you consider making these pension contributions direct from your company as this will result in further savings, helping to reduce the corporation tax on your profits and saving tax on the amounts no longer needing to be drawn.Pay into your spouse’s or child’s pensionYou can give a head start to children or a non-working spouse and set up a pension plan for them.You can pay up to £2,880 each tax year which will receive 20% tax relief from HMRC and will top up their pots to the maximum allowed of £3,600 each year.Make the most of your Individual Savings Account (ISA) allowance You can pay up to £20,000 across your ISAs (if you’re a couple, that’s £20,000 each), including cash ISAs, stock and shares ISAs and lifetime ISAs, which will then grow tax free subject to certain conditions.These valuable tax efficient allowances are an important step to creating wealth in the future, so don’t let them go to waste.Use up your Lifetime ISA allowanceYou can pay up to £4,000 every tax into a Lifetime ISA and earn a 25% bonus from the government on it (if you save the maximum, you’ll get a bonus of £1,000 every year).If you haven’t already opened one, you can only do so before turning 40, and continuing paying (and earning the bonus) until you turn 50. You can use this to go towards buying a house or retiring.Keep in mind this £4,000 goes towards your annual ISA allowance, which for the 2022/23 and 2023/24 tax years is £20,000.Pay money into your child’s junior ISAFor each child, you can pay up to £9,000 into a Junior ISA for the 2022/23 and 2023/24 tax years. Anyone can pay into it, but it must be set up by someone with parental control.Utilise your Capital Gains Tax (CGT) allowanceCGT is charged on profits made when certain assets are sold or transferred. You pay tax on the gains made above your annual tax-free CGT allowance, which for the 2022/23 tax year is £12,300. This is expected to reduce to £6,000 for 2023/24 and even lower the following year.To take advantage of this you may want to consider selling or gifting some of your assets before 5th April, as unused allowances cannot be carried forward.In some circumstances you can also gift a share in your asset to your spouse tax free before a disposal, to make the most of their CGT allowance or perhaps if they pay a lower rate of CGT.Make gifts and reduce your Inheritance Tax billInheritance Tax (IHT) is charged at 40% on estates over £325,000, with an extra £175,000 given against main residences left to direct descendants. These allowances can be combined for a married couple if upon the first death all chargeable assets are left to the surviving spouse.Each tax year, there are a number of lifetime IHT allowances that are tax year sensitive. Using them can reduce any potential IHT bills payable on your death as your estate value is reduced. Each tax year you can:Gift up to £3,000 using your ‘gift allowance’. If you don’t use your full gift allowance, you can carry the remaining forward one yearGift up to £250 per personGift £5,000 to a child getting married, or £2,500 to a grandchildOther gifts exceeding the above values can be given IHT free if the giver survives for at least 7 years post date of the gift, or if they meet specific criteria allowing regular amounts paid from income to be given IHT free. Careful planning is often needed to meet the IHT free requirements.Consider your options as a high earnerIf you’re a high earner (over £50k), consider making additional pension contributions or charitable gifts, to extend your basic rate tax band. This will reduce the amount of tax due at higher rate whilst also help to prevent the child benefit being lost if one parent in the household earns over £50K.For those with income in excess of £100K, in addition to general tax savings such contributions could also help to recover some of the tax free personal allowance which is otherwise lost when earnings exceed these levels.Consider paying R&D costs nowFrom April 2023 there will be a cut in the Research and Development (R&D) tax relief rates. For small businesses this will reduce from 130% to 86%. For businesses that are loss making, the repayable tax credit will reduce from 14.5% to 10%.This coincides with the changes to the corporation tax rates leading to higher charges for some.This smaller R&D saving with a higher tax rate is not as harsh as it sounds on paper. This change will only have a minimal effect for you and your business, however, if you are expecting to incur some R&D costs in the near future, bringing these payments forward (to before 5th April 2023) will of course, bring you savings.Transfer of assets to a lower paying spouse or family member If you no longer require the income from an asset, you can transfer ownership to your spouse or another family owner. Depending on the type of asset owned and who the recipient is, the transfer could be Capital Gains Tax (CGT) free or at a lower rate of tax.This could also be favourable to allow for Inheritance Tax savings.Maximise your tax year end efficiencies nowUnderstanding how to take action ahead of the tax increases, where to invest, how much you need to save for retirement and what to do to secure your family’s financial future can be really difficult on your own – and that’s where getting some smart advice comes in.Our Principal Advisers are on hand to help you alleviate the effects of tax increases, help you maximise your investments and plan for the future. Book a meeting with us now ahead of the 5th April to ensure you enter the new tax year prepared.Email enquiries@a4g-llp.co.uk, call 01474 853 856 or fill in the contact form below.Getting on top of your finances needs to be a priority in 2023. Contact me today!Emma WhiteFCAPartner01474 853856emma.white@a4g-llp.co.uk Send me a message Ask me a questionFill in your details below and I’ll come back to as soon as I can! If your enquiry is more urgent, please do give me a call. Your full name*Contact no.*Email address* Business name*Industry / Profession*Your messageOne last thing...*By ticking this box you agree to being contacted via email or phone by one of our Advisers, and for the information you provide us with to be kept securely for future communications in line with the new GDPR Yes, I agree Share this articleOther posts of interest Turnover is vanity, profit is sanity but cash is reality Read more Should I be VAT registered? Read more How Referral Marketing can help you grow your business Read more See more articles