The tax year end deadline is fast approaching

Now the New Year is underway and the Self-Assessment deadline is passed, it’s time to start planning for the financial year ahead and the ways you can ensure your clients – and your practice – yield the best possible results in 2023.

One of the most important dates and opportunities on the financial calendar for both clients and advisors is fast approaching: the end of the 2022-23 tax year on the 5th April 2023.

Although this marks a busy time across all businesses and sectors, one of the main implications for your clients is maximising their ISA (Individual Savings Accounts) and Pensions Allowances for the current tax year.

2022 ISA’s Allowance

Both ISA’s and Pension Accounts have an annual tax-free allowance threshold. This is the maximum amount of funds or value of assets that can be paid into the account in any given tax year.

As the 2022 tax year closes at midnight on the 5th April, this is the last opportunity for clients to maximise their ISA and Pension investments for the 2022 tax year.

The ISA allowance for the current year is £20,000. This means clients can pay up to £20,000 in cash, stocks, and shares combined across all of their ISA’s before breaching their 2022 tax-free allowance for the current tax year.

If the maximum annual allowance of £20,000 is not utilised by midnight on the 5th April 2022, any remaining allowance from the 2022 tax year will be lost when the 2023 tax year comes into effect and a new allowance for the 2023-24 year opens up.

2022 Pension Allowance

The Pension Allowance for the current and previous three years is £40,000 per year, which could be reduced to £4,000 if a reduced Taper Annual Allowance applies. This will affect individuals who have an annual ‘adjusted income’ of over £240,000 and a ‘threshold income’ of over £200,000.

While the Pension Allowance for the 2022 tax year can be carried over and used in future years if it’s unused this year, it’s important for clients to consider maximising these allowances where possible.

As CTT Practice Manage, Lucy Miles said:

“In a world where taxes are uncertain and likely to increase due to inflation, it makes sense to take full advantage of any tax-free growth you have available, to plan for your future and ensure you’re making the best possible provisions for your retirement.”

If your clients have previously unused Pension Allowance in the current or previous three tax years, the 5th April marks the cut-off for when their Pension Allowance from the 2019-2020 tax year can be used.

The clock is ticking

The close of the 2022 tax year on the 5th April is an excellent incentive for clients to revisit their finances. It’s also an opportunity for you to demonstrate to clients how you can help maximise their investments for this tax year and future years to come.

If you have clients who would benefit from maximising their ISA allowance and pension allowances for the current tax year, contact CTT Private Client for information on the best ways to advise them.

This article was submitted to be published by CTT Group as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.