Navigating tax year end: 10 Dodl-approved checks

Ace the end of the tax year by making these checks before April 5 🚀

Authored on
23 Feb 2024
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  6 minute read

As the curtain falls on the current tax year, marked by the April 5 deadline, it's time to get proactive. April 6 signals the reset button for claiming certain allowances and tax breaks, so it’s crucial to make the most of your opportunities. Have a read of our 10-point tax year end checklist, designed to help you set yourself up to be in top financial shape. 🤸‍♂️

Check 1: turbocharge your ISA! 💰

With a £20,000 ISA allowance per tax year, don't miss the chance to optimise it before the April 6 reset. While the cost-of-living challenges will probably make reaching the full 20k a stretch, consider your longer-term savings goals, and top up your lifetime ISA with its lower, £4,000 annual limit. Just remember this is included in the overall 20k allowance, so if you're lucky enough to max our your LISA, you'll be left with a maximum of £16,000 to put into your investment ISA.

If spare cash is waiting to be invested, act now – the tax year end is your cue to take advantage of your full allowance, or as much of it as possible!

Check 2: pondering your pension? 🤔

Pensions have their limits too, and with a cap of £60,000 a year for most people, or 100% of your salary (whichever is lower), it's wise to evaluate your pension contributions. Again, not everyone maxes out this limit, but topping up before the deadline ensures you've made the most of this year's allowance. Even if you haven’t had any income this year, injecting £2,880 into your pension will blossom into £3,600 with the government's top-up. Seize the opportunity to boost your pension pot! 🍯

Check 3: high earners alert! 💼

Navigating the intricate tax system can be tricky, especially with the £100,000 earnings threshold, which is the point at which the tax-free allowance gradually decreases until it is completely phased out for those with high income. So if you’re lucky enough for your income, including bonuses, commission, and investment returns, to top this limit, brace yourself for a higher tax rate. But there is some good news – making pension contributions can bring your earnings under the threshold, providing a strategic tax-saving move.

Check 4: unlock the marriage allowance! 💍

For those with low income, working part-time or taking a career break, the marriage allowance can be a game-changer. If your partner is a basic-rate taxpayer (earning £50,270 or less), you can transfer your unused tax-free allowance to them, reducing their tax bill. It's a financial win-win for couples!

Check 5: child benefit and earnings 🍼

Parents claiming child benefit should be mindful of their earnings tipping over £50,000. As earnings rise, child benefit decreases on a sliding scale. ⚖ To secure the full benefit, consider using the little hack we just mentioned and make pension contributions to keep earnings below the threshold, ensuring your child benefit remains untouched.

Check 6: Tackling tax on savings 💰

Most people can earn some interest on their savings before they have to pay tax, which is called the Personal Savings Allowance. With the Personal Savings Allowance granting tax-free interest up to £1,000 (£500 for higher rate taxpayers), savvy savers need to watch their interest earnings. Saving rates have risen, so it’s much easier to hit the limit these days. If you have, there’s not much you can do this year. But next tax year, consider sheltering your cash in an ISA, weighing the benefits against potential tax. It's a calculator-worthy decision! 🧮

Check 7: kiddie savings and the taxman 🧸

Another fun, little quirk of the tax system is that if your children have savings accounts and they earn more than £100 in interest a year, that will be viewed as though it’s your savings interest, which means it could be taxed (if you’ve already gone over your Personal Savings Allowance – or if it tips you over it). ISAs again come to the rescue, shielding interest from the taxman. Evaluate whether the tax hit is worth it or if a Junior ISA is a smarter move for your little ones. At Dodl we don’t offer a JISA, but our friends at AJ Bell can help you out with that. 👌

Check 8: cash in your gains – strategically! 📈

Investments outside ISAs or pensions could pay capital gains tax on any assets that have grown in value. From April 2024, you’ll pay tax on any profits of more than £3,000, so consider it strategically – if you’re sitting on big gains, it might be better to sell the investment and realise them this tax year. You can just sell enough to meet your tax-free limit, so you use it this year (because it’s another use it or lose it allowance). If you need any help on how selling investments works, we’ve got you covered.

A nifty way around it could be selling the asset and repurchasing within your ISA, to protect those future gains from the taxman.

Check 9: Side hustle and the tax-free zone 💼

Exploring side hustles? Keep the first £1,000 earned tax-free with the 'trading allowance.' This means everyone has a limit of £1,000 they can earn from something that’s not their main job before they have to pay tax on the money. From Etsy businesses to weekend gigs, your extra income can remain a tax-free delight – but check the government's advice to sure you’re playing by the rules. ✅

Check 10: divide and conquer! 🤝

For couples, sharing assets can unlock benefits. For example, perhaps you maxed out your lifetime ISA allowance. Fear not! You could transfer some funds to your partner as a gift and tap into their allowance (assuming they're lifetime ISA eligible). The same principle applies to their capital gains tax allowance—shift investments their way, and you keep some more to yourselves. 💕

Transferring to a spouse (be it a husband, wife, or civil partner) usually incurs no tax. But hold the applause for a moment. Moving money means sharing, and while love knows no bounds, financial boundaries are a different story. It boils down to how you, as a couple, communicate and navigate the realm of shared finances. 💸



🔔 Always remember, the value of your investments can go down as well as up. Dodl doesn’t give advice, so if you’re unsure about investing, it’s always best to speak to a financial adviser.


It's important to know

You have to be a UK resident for tax purposes to open an account with Dodl.

The past performance of investments isn't an indicator of their future performance and their value can go down as well as up. This means you could get back less than you originally invested. 

Dodl doesn’t offer any advice so if you’re not sure about the risks involved with investing, you should speak to a suitable financial adviser. 

How you're taxed depends on your circumstances, and tax rules can change in future.

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