New Year’s resolutions could save taxpayers money

Robert Salter, Director said:

With a new year comes resolutions. You may have considered making them for your personal health after the indulgences of Christmas, but the health of your finances is just as important and looking after your taxes plays a big part.

If you have yet to finalise your tax return for 2023/24 you have until 31/01/2025 to complete it. Taxpayers in this position should seriously consider making a new year’s resolution to complete their returns more quickly. This will save stress and the risk of a possible fine from HMRC.

If you are eligible for tax relief, but have not claimed it previously, perhaps make a resolution to do so this tax year. If you are making charitable contributions and you are a 40% or 45% taxpayer, you could prepare a tax return to claim the additional rate tax relief which is available on gift aid contributions.

You can also ‘bring forward’ your claim for gift aid relief. If you have made a gift aid payment in 24/25 UK tax year and it is prior to the filing of your tax return, you can claim tax relief for these contributions in the tax year.

Another resolution could be to plan ahead when it comes to pensions. If you get a bonus this year, which are typically paid in February or March, you should consider whether this is paid into your pension scheme as an employer contribution rather than received in cash.

There is also a National Insurance Contribution (NIC) easement in place which allows taxpayers to pay voluntary NI contributions dating back to the 2006/07 tax year. This allows taxpayers to maximize their state pension entitlement. The application for this easement needs to be submitted by 5th April 2025 at the latest.

You could look to make your investments as efficient as possible in 2025. If you are married, consider whose name the investments are held in. If one spouse or civil partner works and the other one does not, it might be sensible to have investments legally held by the non-working spouse, so that you can use that individual’s personal tax allowance.

Finally, you could resolve to be proactive about reviewing and amending your tax code. Check your PAYE Notice of Coding for the 2025/26 tax year and consider whether any tax reliefs for pension contributions, professional subscriptions or benefits-in-kind are accounted for in the coding notice.

This means you can get tax relief as quickly as possible rather than waiting for a tax return to be filed and avoid the pain of having a significant tax liability to settle when the tax return is filed.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Robert Salter using the form below.