SWT Wealth Management
Advertising feature: As the new tax year has started, here is a reminder of the main tax exemptions and allowances, and what has or hasn’t changed for this year.
The personal allowance – the amount of income you don’t pay tax on remains at £12,570. The basic rate is still 20%, and the higher-rate threshold, at which you start paying 40%, is £50,270. These will be frozen until 2028. However, the additional-rate tax threshold, at which you pay 45%, drops to £125,140. National Insurance contributions will be frozen until 2028. Most employees will pay National Insurance at 13.25%, taking the total tax from their salaries, including 20% basic rate, to 33.25%.
But there are significant changes to Dividend Tax. The dividend allowance has been cut from £2,000 to £1,000 and then to £500 in April 2024. If you own shares in a company, or receive dividends from funds or investment trusts, this is likely to affect you. Because of the changes to Dividend Tax, you may want to talk over your options for making better use of the continuing tax allowances for ISAs and pensions. We’re happy to review your plans and goals with you and help decide what’s right.
The standard annual allowance for pension contributions – has increased to £60,000 or up to 100% of relevant earnings if less, with effect from 6 April 2023. If you’re saving towards your retirement, you now have the opportunity, to greatly increase the amount you can pay into your pension pot each year, whilst still taking advantage of the generous tax allowances associated with pensions.
The lifetime allowance – the most you can save in your pension pot before you do start paying tax – usually moves up in line with inflation. However, from 6 April 2023 to 5 April 2024, no one should have to pay a lifetime allowance charge which means you can carry on paying into your pension pot without worrying about receiving a tax penalty. Then from 6 April 2024, it will be completely abolished, meaning no limits on how much you accumulate in your pension while still enjoying its tax advantages.
ISA allowance is still £20,000 for 2023/24, both for Stocks & Shares ISAs and Cash ISAs. Although interest rates have risen quite steeply in the last year, they remain significantly below inflation, eroding the real value of your savings in any Cash ISAs. Investing in Stocks and Shares ISAs still has more potential to achieve the best long-term results for ISA savers.
What’s changed about Capital Gains Tax allowance – the amount you can make on capital gains before you start paying tax, has been cut to £6,000 and then to £3,000 from April 2024. You’ll probably want to discuss this further with us if you are planning to sell any valuable assets or investment property.
Corporation Tax– has risen to 25% as planned. The rate for businesses with £50,000 profit or less will stay at 19%, and there will be a marginal taper for those with profits between £50,000 and £250,000. This has been a challenging year on many levels. It’s more important than ever to ensure you’re using all the allowances and exemptions you’re entitled to.
The value of an investment with St. James’s Place will link directly to the performance of the funds selected and may fall as well as rise.
You may get back less than the amount invested. An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a Cash ISA or a deposit with a bank or building society.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Please note that Cash ISAs are not available through St. James’s Place and although anyone can contribute to an ISA for a child only the parent/legal guardian can open the ISA for them.
SWT Wealth Management is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
To find out ways we can help visit: www.swtwealth.co.uk or contact us on 029 2252 0168 or 07946183512
SJP Approved 30/03/2023