U is for Utilising Allowances

U is for Utilising Allowances

U is for Utilising Allowances

We are approaching the end of the tax year in April.

This is a great time for taxpayers to review and ensure that you have utilised the allowances available to you where possible.

You should review all your sources of income and expenditure and bear in mind that any grants received due to coronavirus in this tax year are also taxable. 

The allowances available for an individual this tax year are as follows:

  • Personal allowance – this is the amount an individual can earn before paying income tax.
  • The amount for 2022/23 is £12,570. Please note if your earnings are over £100,000 the personal allowance is reduced by £1 for every £2 of income over £100,000.
  • Dividend allowance – all individuals in the UK are entitled to receive £2,000 of dividends tax free, regardless of their other income
  • Savings allowance – this is an allowance against bank and other interest receivable. The rates are £1,000 for a basic rate taxpayer and £500 for a higher rate taxpayer.
  • Trade allowance – there is a flat allowance of £1,000 for all trading income such as selling on Amazon. If income exceeds £1,000 then you can elect to deduct the allowance rather than the relevant expenses.
  • Property allowance – this is the same as the trade allowance but for rental income received.
  • Capital gains tax annual exemption – for the sale of capital items such as investment properties or shares. The annual exemption is £12,800.
  • Private Pension contributions.

Pre year end spending – If you are thinking of any large spends e.g. assets or training etc now is a good time to do it if your cashflow allows it as you will get the reliefs quicker. 

If you’re not sure , then get in touch. I will be happy to help!

Thank you for reading this weeks blog – U is for Utilising Allowances, see you next week.

Flo

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