Bishop Fleming provides advice on tax-efficient strategies to reduce your liability and ensure that you are compliant.
Our personal tax planning guide is an aide memoire to help you ensure you have used all available reliefs and allowances for the tax year and have identified possible opportunities to minimise your tax bill.
Key issues to watch out for include:
Many of the suggestions in this guide can be reviewed throughout the tax year, but as a tax year ends and a new one beckons there is a particular opportunity to review your tax affairs to make sure you have minimised your tax bill.
Our guide provides a selection of ideas and suggestions to reduce your exposure to tax by taking advantage of available reliefs and allowances, some of which are lost once the tax year ends.
A key issue this year, as mentioned in the guide, is that from 6 April 2022 dividend tax rates will increase by 1.25% as part of the Health & Social Care Levy (NIC rates will increase by the same amount).
All taxpayers will still receive the first £2,000 of dividends free of tax
For tax year 2022/23, dividend tax rates remain lower than their related income tax rates but will increase as follows:
The 1.25% extra will also apply to overdrawn directors' loans from 6 April 2022 from the current rate of 32.5% to 33.75%.
Shares held in ISAs are not subject to dividend tax and, due to the £2,000 tax-free dividend allowance and the personal allowance, around 60% of individuals with dividend income outside of ISAs are not expected to pay any dividend tax or be affected by this change in 2022-23.
Subject to commercial and other considerations, director shareholders may wish to consider taking a dividend before 6 April 2022 to avoid the tax increase.
But bear in mind:
Please contact your usual Bishop Fleming advisor to discuss your particular circumstances to see if your company should pay a dividend before 6 April 2022.
If you would like to discuss your tax affairs, please contact a member of our personal tax team.
We have other planning guides that you may also find useful