WHY IT COULD PAY TO USE YOUR 2023/24 TAX YEAR ALLOWANCES RIGHT NOW

The new tax year has only just started. Yet, making the most of your allowances now, rather than waiting until March 2024, could make sense. Read on to find out why.

When a new tax year starts on 6 April, many allowances reset. Using allowances could reduce your tax liability and improve your long-term financial security.

In the past, you may have waited until the end of the tax year to calculate how much of your allowances you’ve used and then potentially made the most of remaining allowances. However, taking some time to assess how you’ll use appropriate allowances now could be useful – here are four reasons why.

1. Avoid making last-minute decisions: If you wait until the end of the tax year, you may find you need to make decisions quickly. It could mean you overlook potential opportunities or choose an option that isn’t right for you. By going through your allowances now, you can give yourself plenty of time to understand how your decisions could affect your short- and long-term finances. Making use of allowances now also means you don’t have to worry about delays and a looming deadline.

2. Benefit from an extra 12 months of returns or interest: Do you want to boost your savings or investments over 2023/24? Thinking about how allowances could help you reach your goal now could mean you benefit from an extra 12 months of interest or returns.

3. You can spread out contributions over the tax year: If you don’t have a lump sum available to use your allowances now, a plan at the start of the year can still be valuable. It means you could spread out contributions and make it part of your budget. Let’s say you want to add an extra £5,000 to your pension from your take-home pay this tax year. Rather than depositing a lump sum, setting a direct debit of around £420 each month can ensure you stay on track as it will become part of your regular outgoings.

4. Ensure your decisions reflect your goals throughout the year: Setting out how you want to use tax breaks this year can help ensure your financial decisions reflect wider goals. Reviewing your finances now is an opportunity to see what steps you can take to move closer to aspirations like retiring early, purchasing property, or lending financial support to loved ones. .

Please contact us on 01273 774855 or email shoreham@pembrokefs.co.uk if you would like more information and quote reference PFSIS.