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Prepare for the Tax Year- End Before April 6!
The countdown to April 5th is on, signaling the end of the tax year in the UK. For young workers in their 20s to 40s, now is the time to make strategic financial moves that could save you pounds and headaches down the line. Sure, you might be excited about a fresh financial year, but before you celebrate, there are essential tax considerations to look into to ensure that you're not hit with unexpected tax bills.
In UK Tax Payers: DO THIS Before April 6th, the video discusses essential tax moves to make before the end of the tax year, which sparks deeper insights into how young savers can navigate these changes effectively.
Monitor Your Savings Interest
With the Bank of England's interest rates rising significantly—from near-zero levels to high percentages—many are at risk of paying tax on savings interest for the first time. If you earned over £1,000 as a basic rate taxpayer or £500 as a higher rate taxpayer in interest this past year, you might owe tax on the excess. Don't panic! Simply check your total interest earned via online banking and compare it against your Personal Savings Allowance (PSA). If you are at risk of surpassing these limits, consider transferring excess funds into a tax-free Cash ISA to shield them from taxes.
Don’t Miss Out on Valuable Allowances
The old saying, “use it or lose it,” rings especially true regarding tax allowances. This year saw cuts in tax-free limits on dividends, capital gains, and gifting. You can no longer receive £5,000 in tax-free dividends; this limit dropped to just £500 for the current year. Be proactive: ensure you know your dividends, and take advantage of gifting allowances or moving investments into an ISA before the limit resets.
Secure Your State Pension
Perhaps one of the most impactful financial moves you can make is ensuring your National Insurance (NI) contributions are up-to-date. The government has extended a unique opportunity, allowing individuals to fill gaps in their NI contribution records back to 2016, which could enhance your state pension by thousands later on. Check your NI record and consider making voluntary contributions if you have missing years—the deadline is closing in.
In light of these financial nuances, there’s no better time to get savvy about your assessments and allowances than now. Get expert help if needed. Tax advice from professionals can make navigating the complexities of your financial situation a breeze. So, as April 6th looms closer—make sure you’re prepared to optimise your savings and investments ahead!
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