3. Giving to charity
Tax payers at the 40 per cent rate or higher may benefit from tax relief on gift aid donations they make to charity.
Spouses should consider making sure that any charitable donations are made by the spouse with the higher marginal tax rate to maximise income tax relief.
Individuals can also gift quoted shares or an interest in land to a charity.
"This has the advantage of income tax relief being available on the market value of the asset as well as the disposal being exempt from capital gains tax," says Whatling.
4. Tax on savings income – sharing with a spouse
Some individuals have a starting rate band of £5,000 for savings income, subject to the level of their total income, and £2,000 for dividend income in 2022/23.
Savings and dividend income falling within these bands is taxed at 0 per cent.
Separate to the starting rate savings band, a personal savings allowance is available to basic and higher rate taxpayers but not to additional rate taxpayers. The allowance is £1,000 per year for basic rate taxpayers and £500 per year for higher rate taxpayers.
Whatling says: "Spouses and civil partners should review who holds any savings that generate taxable income to ensure these allowances and rate bands are utilised efficiently.
"You should be aware though that the dividend allowance will halve from April 2023 to £1,000 and then halve again to £500 from April 2024."
5. Making use of tax-free or tax-efficient investments
There are various tax-free and tax-efficient investments available.
For instance, savers can consider making tax-free investments through Isas or National Savings.
The annual ISA subscription limit for 2022/23 is £20,000, and this limit cannot be carried forward if not used. There are also Junior Isas for children under 18 (2022/23 limit £9,000).
Normally, income arising on funds given to children by a parent remains taxable on that parent if over £100 a year. As Isa income is not taxable, this allows people to give cash to their children without having to pay tax on the income generated, Whatling says.
Enterprise Investment Scheme, Seed Enterprise Investment Scheme, and Venture Capital Trust investments may provide tax relief and the opportunity to defer capital gains.
But Whatling says: "These investments are considered high risk, and there is a risk of further changes to the schemes, potentially even at the 15 March 2023 Budget."
6. Capital gains tax – it’s all about the timing
As capital gains tax is charged when an asset is sold, people have some control over when to pay it.
"If you have unrealised gains, you may find it beneficial to sell enough assets each year to use your CGT annual exemption, which is £12,300 in 2022/23," says Whatling.
"Crystallising unrealised losses to offset gains may also be an option. You can consider selling an asset which stands at a loss, or making a ‘negligible value’ claim on assets that currently have no value.
