Your checklist for saving tax in 2024

Kirsty Young Tax

Happy new (tax) year! OK, it may be just us who send cards and decorate the office, but it is a fairly exciting point in the year for any tax geeks.

The start of the new personal tax year (April 6th 2024 – 5th April 2025) is a time when important allowances are reset, and new tax planning opportunities arise. What’s more, the much-trumpeted tax changes announced in various budgets now spring into action like blossom on a cherry tree.

To get you off to the most efficient start, here are some key tax saving points to consider for the new 2024-25 tax year.

 

Do you complete a tax return?

If you do, then preparations for the tax year 2024-25 should start with your tax return for 2023-24!

Don’t put your tax return off until the autumn (or January!). NOW is the time to start gathering your paperwork for your tax return. Check out our previous blog on the subject for a reminder of the sort of information you might need.

As the basic minimum you will need:

  • Forms P11D, P60 and P45
  • Interest from bank accounts
  • Student Loan information
  • Income and expenses from any side hustles or property rentals

Why should I do my tax return early?

Getting your 23-24 tax return done early will help in knowing what tax you need to pay by 31st January 2025. This info will be great for planning purposes!

You might also find it easier to remember things and gather paperwork for events that have happened over the last 12 months that may need to be included. By January next year you may not simply remember.

You’ll also enjoy the peace of mind of knowing that your return is done for the year. (And yes, you can be a little smug too!)

If you know you are due to pay some tax in July 2024, known as a ‘payment on account’, submitting an early return can often have a positive impact. This is because the HMRC can change the amount required on account based on real figures from the previous year, rather than a “best guess” extrapolation.

 

Tax tips for Ltd Company Owners

Some tips and reminders for you, now that we are in a new tax year:

Review your director’s salary

The tax allowances and ‘bands’ are staying pretty much the same this year. However, you still need to review your director’s salary level to make sure it’s as tax efficient as it could be.

A common ‘efficient’ level of salary this year will be something between £758 and £1,048 per month, depending on your circumstances.

The ‘tax free’ Dividend Allowance has dropped

The ‘tax free’ Dividend Allowance has plummeted from £2,000p.a. a few years ago, to just £500p.a. this year. Still, it’s worth utilising as it’s a ‘use it or lose’ it allowance.

The VAT threshold has gone up

If you are not VAT registered, ensure you are monitoring your turnover (sales) throughout the year. It can be all too easy to lose track and suddenly see you are perilously close to the new VAT threshold of £90,000. With VAT, you want to be ahead of the game, and not get caught out by having to register late. Watch our video on late VAT registration here.

Consider voluntary VAT registration

It is possible to register before reaching the threshold of £90,000, but you need to do your homework and research and decide whether voluntary VAT registration is right for you.

Voluntary registration for VAT can often be beneficial if you are working directly for VAT registered businesses. Equally, it can be commonly avoided if your clients are the general public! Watch our video on voluntary VAT registration here.

Plan your pension contributions

Think about whether you want to contribute to a pension this year, and if so, how much you will pay into that pension. Using only company ‘employer contributions’ can often result in a better overall tax saving. Speak to a pensions professional on this to make sure that’s the right option for your particular circumstances.

Plan your cash flow

Take time to plan out your cash ‘ins and outs’ over the year. This is especially important if you are thinking of recruiting or growing in general. You can get a simple, free cash flow tool here to help do this.

 

Sole Traders

Our 2024 top new tax year tips and reminders for sole traders.

Time to go Ltd?

Would you be better off as a limited company? Track your profits and review your numbers regularly. As the year goes on, the numbers may show if you would be better off going limited. As a ballpark number, if your profits are reaching around £45,000 a year, this is a great time for this discussion.

If you don’t have a system to monitor profits, consider setting up a cloud software solution such as QuickBooks or Xero.

Monitor your sales

Monitor your turnover (sales) throughout the year to check if you are getting close to the VAT threshold of £90,000. Better to know it’s coming than to register late. Watch our video on VAT registration here.

Voluntarily registering for VAT

Keep an eye on whether voluntarily registering for VAT is a good business option for you. You can register before the current VAT threshold of £90,000, and you should take a good look at this if you are working directly for businesses registered for VAT. It’s common to resist the temptation to register early if the vast majority of your clients are non-VAT registered, i.e. the general public! Watch our video on voluntary VAT registration here.

Plan your budget

Do a cash budget for the tax year ahead. Plan your ‘ins and outs’. This is especially important if you may need to recruit, or your business is growing. You can get a simple, free cash flow tool here to help do this.

 

Employers

If you employ others to work for you or your business, these tips are for you.

Claim Employers/Employment Allowance

This allowance can save up to £5,000 for your business.

If you are eligible for Employment Allowance, you must re-send an ‘EPS’ (Employer Payment Summary) every year with the box ticked for Employment Allowance. You need to do this once every new tax year to continue to claim the allowance.

Check your minimum wage levels

Minimum wage tends to rise every year if only by a little. If you are paying any of your team close to the living or minimum wage, check the pay rates as the rates increased in April 2024.

 

And a few general reminders…

Property sales, CGT and more – tips for things to keep an eye on for 2024.

Selling or sold a property?

If you sell a property at a gain, you may need to do a special tax return within 60 days of completion – remember to do this! Property sales that may involve CGT include:

    • Buy-to-let properties
    • Business premises
    • Land
    • Inherited property sold at a profit

See this government site for more details.

Capital Gains Exemption

Another sad news reminder; the annual amount that is exempt from Capital Gains has dropped again to a mere £3,000. If you have sold items such as crypto or shares and made profits over this amount, you will need to declare them on the tax return.

For those in the even higher earnings levels

If you are lucky enough to earn more than £125,140 you now start paying the higher 45% personal tax rate at this level. If you have income between £100,000 and this level, it’s the worst ‘effective’ tax rate in the system, so really consider using things such as pension contributions to help this (more in another blog).

Side hustles

You can earn up to £1,000 tax free from side hustles such as selling items online, or renting out a room for B&B. Any earnings above £1,000 should be declared on your personal tax return.

This is particularly relevant because as of 1 January 2024, major online sales platforms including Vinted, eBay, Etsy, and Airbnb must report a seller earnings to HMRC. According to Etsy.

“Online marketplaces are required … to report information on UK-based sellers, including their yearly sales transactions, if sellers meet the HMRC reporting threshold.”

So just keep an eye on what you are selling and for how much. More details here.

Child Benefit

Child benefit had a major shake-up in the last Budget. From April 6th 2024:

    • The point at which you start paying child benefit back has gone up to £60,000.
    • The rate at which you repay it via the ‘High Income Child Benefit Charge’ has been slowed down, which means you only completely lose the benefit at £80,000.

As a result, if you’ve previously stopped claiming it, this year you may want to review it to see if it’s worth claiming again.

 

New tax year help from Heelan Associates

If you need any help with these points, be sure to get in touch with our team – we’d love a discussion on how we might support you. Equally, if you don’t have an accountant, or feel you aren’t making the most of tax year allowances with your current accountant, get in touch.