7 things to think about this new tax year – Financial Planning for You

Annual Allowance: The amount you can pay into a pension and gain tax relief is being increased to £60,000 from £40,000. (Up to 100% of your salary). Boost your retirement provision even further.

Lifetime Allowance: This is to be abolished in 2024. From April 2023 the penalty for exceeding the current limit of £1,073,100 is being removed.

Money Purchase Annual Allowance: This is going from £4,000 to £10,000 pa, meaning this is the amount you can put back into your pension without incurring a tax charge if you are flexibly taking income from your pension. Great if you decided to take more money out of your pension lately due to the cost-of-living crisis.

State Pension Triple Lock: Those receiving the State Pension will receive a double-digit boost. The State Pension will increase by 10.1%, the full new pension, therefore, going from £9,628 to £10,600.

Capital Gains Tax exemption: This will fall from £12,600 to £6,000, meaning more of your gains will be taxed at 10% or 20% depending on tax status. It is therefore wise to get more in your ISAs.

ISA allowance: The annual allowance of £20,000 pa is unchanged. All gains and withdrawals are tax-free in and out of the ISA.

Income tax bands: These are frozen – until 2028, the rates will stay the same, not increasing with inflation. In addition, the threshold above which people pay the additional rate of income tax is being reduced from £150,000 to £125,140. This means more people will pay more tax, which means it’s never been more essential to consider the above tax wrappers (i.e. pensions & ISAs with your financial planner).