There’s nothing like the beginning of a New Year to focus your mind on getting around to reviewing your money matters.
With the pressures from rises in inflation, tax, and household outgoings, the coming year could prove a rocky road for all.
Keeping key financial dates in mind is crucial if you want to stay in control and to make the most of your investments.
Here are some of the dates you need to know about in 2023.
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31st – Self-assessment deadlines
- By the end of the month those who are required to fill out a self-assessment tax return – which includes the self-employed, high earners and those with income not taxed at source – must file and sign their online return.
- It’s also the deadline for the self-employed to pay the tax they owe for 2021/22 as well as a payment on account for the self-employed.
- Deadline for Capital Gains tax payment on any assets including investments (but excluding residential) sold in 2021/22 tax year.
Chancellor Jeremy Hunt will set out a Spring Budget on March 15, which could bring new tax measures. One to look out for.
5th – End of tax year
- Investors have until 5th April to use up their ISA allowance – if you don’t use it, you lose it. You can pay into a stocks and shares ISA and hold it as cash if you don’t want to make a rushed decision on where to invest it. Be sure to check the cut off times if you’re likely to leave it until the last day. Better still, don’t leave it until the last minute – put a note in your diary in the new year to sort out in advance – perhaps on a quiet January weekend.
- The end of the tax year is also the date by which you should use up your annual pensions allowance. In the 2022-23 tax year, you can receive tax relief on up to £40,000 of pension contributions each year (or 100% of your earnings, or minimums of £3,600 if earnings are lower), whichever is lower. Please note, that in the 2023-24 tax year, tax relief on pension contributions rises to £60,000 each year (or 100% of your earnings, or minimums of £3,600 if earnings are lower).
- Capital gains tax-free allowances are shrinking in the next tax year so it’s worth considering the timing of any capital gains you might be making.
6th – Start of new tax year
- There’s a fresh allowance for ISAs of £20,000 per investor (£9,000 for a Junior ISA).
- Early bird ISA investors can benefit from having money invested as potential growth over the next 12 months could provide a valuable boost to your portfolio.
- The longer you’re prepared to stay invested, the greater the chance your investments will yield positive returns.
- While most people don’t have £20,000 waiting in the wings to be invested in an ISA, the good news is that you can still benefit from compounding returns by investing amounts regularly as soon as the tax year starts.
- Lifetime allowance tax changes
- As of 6th April 2024 there will no longer be a maximum amount of pension savings that you can build up over your lifetime. The limit, known as the Lifetime Allowance (LTA), is currently £1,073,100. Any excess was previously taxed at a maximum of 55% but as of April 2024 this will no longer be the case. Until then, whilst the LTA remains in place, the LTA tax charge will be removed, meaning no one will pay an LTA tax charge from 6 April 2023.
- The changes mean that you can save into your pensions without the concern of a lifetime allowance tax charge should you breach the limit.
- Pension annual allowance increases
- The annual allowance is the limit on the amount that can be contributed to your pension each year while still getting tax relief. For the 2023-24 tax-year, for most people, it's £60,000 (up from £40,000 in the previous tax year), or the value of your whole earnings - whichever is lower. Lower allowances may apply if you have already started drawing a pension, or if you are a higher earner with income plus pension contributions that total above £260,000.
- The dividend tax-free allowance drops from £2,000 to £1,000 per person and the Capital Gains Tax (CGT) allowance falls from £12,300 to £6,000.
- Investors who hold money in funds or shares outside a pension or an ISA will face a greater tax burden from now, which is a reminder of the value of ISAs in protecting investors from having to consider CGT or dividend tax.
- Top rate income tax threshold falls
- The top rate of income tax charged at 45% will apply to those earning over £125,140 – down from £150,000. This will mean more people will fall into the top rate bracket.
- Corporation tax rise
- The main rate of corporation tax will increase from 19% to 25% so many of those running a limited business will pay more .
- State pension increase
- The beginning of the new tax year sees the State Pension rise by 10.1% .
31st – Tax payment on account
There’s usually a second payment deadline of 31st July if you make advance payments towards your bill known as ‘payments on account’.
The date will be set closer to the time, but November is typically the month when the Chancellor makes the main Budget statement for the year which could bring new measures. Again, watch this space.