2022/23 tax tips
Make sure you’re tax year end ready with these end of tax year top tips. You could be missing out on additional allowances, or you might not be getting the most out of your existing allowances.
Personal savings allowance
You can earn up to £1,000 in interest on your savings without paying tax on it. This can be a nice bump – and many people won’t go over this £1,000 annual allowance. For example, you’d need around £33,500 in an account paying 3% interest to hit the £1,000 annual interest allowance.
Your personal savings allowance will be different depending on which tax band you fall into. The £1,000 personal savings allowance applies to people who are in the basic tax rate band, but if you’re in the higher tax rate band, this falls to £500. People in the additional tax rate band have a savings allowance of £0 – so it’s important to check which band you fall into before trying to take advantage of this allowance before the tax year ends.
| Tax band | Income tax rate | Personal savings allowance |
|---|---|---|
| Basic rate | 20% | £1,000 |
| Higher rate | 40% | £500 |
| Additional rate | 45% | £0 |
So it could be time to start putting some money into your savings accounts to maximise the amount of interest you earn each year and make the most of this additional allowance.
If you don’t have a savings account yet, and instead rely on a current account with your bank for example, why not open one today? Check out the savings accounts Moneybox offers to get you started.
Dividend allowance
The first £2,000 you make in dividend payments from any investments you hold is tax free. So if you’ve invested in stocks that pay a dividend, you won’t pay tax on any earnings those stocks bring in through dividends up to £2,000.
Any earnings over £2,000 held outside of an ISA will be taxed at the following amounts depending on your tax band.
| Tax band | Tax on dividends over £2,000 |
|---|---|
| Basic rate | 8.75% |
| Higher rate | 33.75% |
| Additional rate | 39.35% |
The dividend allowance is falling from £2,000 for the 2022/23 tax year, to £1,000 for the 2023/24 tax year, and then to £500 2024/25 tax year. So if you’re earning money from dividends outside of an ISA, you could be missing out on tax-free gains.
If investing in stocks is something that you’re interested in, why not open a Moneybox Stocks & Shares ISA? You’ll get exclusive access to stocks in 20 of the biggest US companies including Apple, Microsoft and Tesla – and any gains you make will be tax-free. Plus, you’ll be getting the most out of your annual £20,000 ISA allowance before it resets for the new tax year.
We’re also running an end of tax year prize draw – and every £100 you deposit into a Stocks & Shares ISA before midday on 5th April automatically gets you one entry. There’s a grand prize of £20,000, and five runners-up prizes of £1,000 up for grabs. Open an ISA today and deposit at least £100 to stand a chance of winning. T&Cs apply.
All investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and is subject to change.
Capital gains tax allowance
The capital gains tax allowance – the amount of money you can earn on your investments before paying tax – is going down after the 2022/23 tax year ends. For reference, the capital gains tax allowance in the 2022/23 tax year was £12,300. But that’s dropping to £6,000 for the 2023/24 tax year, and it’s falling to £3,000 in the 2024/25 tax year.
So, now could be the time to make the most of your tax-free ISA allowance if you haven’t started doing it already. An ISA lets you earn gains and interest on your investment without paying capital gains, dividend or income tax.
This is a great benefit to saving or investing with an ISA – like a Stocks & Shares ISA – compared to other options like a General Investment Account (GIA). That’s because with a GIA, you’ll pay tax on your gains.
If you’re already investing – but you’re not using a Stocks & Shares ISA – why not open one today to start benefiting from tax-free gains?
Self-employment allowance
If you’re self-employed, or if you have a side-hustle, the first £1,000 you earn is tax-free. This is known as your ‘trading allowance’. If you have a side-hustle or if you work for yourself, it’s worth looking into whether you have any of this left to claim before the new tax year starts.
And if you’re self-employed, you might have a self-invested personal pension, also known as a SIPP. If that’s the case, it’s good practice to make sure you’ve made use of your annual pension allowance before it resets when the new tax year starts.
You can contribute up to £40,000 into a SIPP each tax year – and the government will give you a top up of at least 25% on your deposits. Please note, payments you make into your pension won’t be accessible until the minimum pension age (currently 55 increasing to age 57 from 2028)
So, if you invest £4,000 into your SIPP this year, you’ll get at least an extra £1,000 on top thanks to the government top up. That means the more you deposit into your SIPP, the greater your annual top up will be.
Check out the Moneybox Pension if you haven’t already, and see how our team of detectives can help you locate your lost pensions and bring them all into one easy-to-manage pot. Plus, just like with a Stocks & Shares ISA, every £100 you deposit into a Pension before the tax year ends automatically gets you one entry into our end of tax year prize draw! T&Cs apply.
Check out the Moneybox Pension
Just make sure you compare the charges, investment options and benefits between Moneybox and your old provider before transferring. We also can’t accept a transfer from a pension that your current employer is paying into. If you’re not sure whether the Moneybox Pension is right for you, you may want to contact a suitably qualified financial adviser for help.
As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and is subject to change.
Rental allowance
If you rent out a property, the first £1,000 you make in rental payments from that property is free from tax. But, if you claim the rental allowance – you cannot claim a deduction for any allowable expenses. This only applies to you if you’re not using the rent a room scheme.
If you’re using the rent a room scheme as a live-in landlord, you can earn up to £7,500 each year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.
If you’re currently working towards your first home, and you’re not looking to buy-to-let, the Moneybox Lifetime ISA can help get you there faster – with an annual allowance of £4,000 to save for your first home.
Plus, the government gives you a 25% bonus on everything you deposit into a Lifetime ISA each tax year – so if you deposit the full £4,000, you’ll get a bonus of £1,000 for free!
This £4,000 allowance is included within your total £20,000 ISA allowance – so if you have one but not the other, you might want to look into how having both can help you get the most out of your annual £20,000 allowance.
And, just like with our Stocks & Shares ISA and Pension, every £100 you deposit into a Lifetime ISA before midday on 5th April 2023 gets you one entry into our end of tax year prize draw – where the grand prize is equal to an annual ISA allowance: £20,000! T&Cs apply.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Remember: if you opt for the S&S LISA, all investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.