Final Tax Planning Tips for 2024/25: Maximise Your Allowances Before April 5th!
As we approach the end of the tax year on April 5, 2025, it’s crucial for limited company directors, shareholders, and employees to ensure they’ve fully utilised their tax allowances. Not doing so could mean missing out on valuable savings. Here are our 7 top tax-saving tips that you need to act on before 5th April to optimise your tax position.
1. Tax-Free Personal Allowance: £12,570 Make sure you’ve used up your full personal allowance of £12,570. If you haven’t hit this amount in salary, consider increasing your income up to this threshold, as it’s tax-free!
2. Consider Your Spouse/Partner’s Personal Allowance If your spouse or partner has unused personal allowance, consider transferring some income to them (e.g., salary & dividends), which can reduce the overall tax liability for the family. Having two people on the payroll entitles extra NI allowances.
3. Tax-Free Dividend Allowance: £500 The dividend allowance allows you to receive £500 of dividends tax-free. If you’re a director or shareholder of your limited company, plan your dividends wisely to take advantage of this.
4. Use of Home as Office (£312) If you work from home, you can claim up to £312 in tax-free expenses for the use of your home as an office. This is a flat rate, so if you’re eligible, don’t miss out on this easy savings.
5. Trivial Benefits: £300 Each You can give employees (including yourself as a director) small, tax-free gifts of up to £300 each. It’s a fantastic way to reward your team without incurring any tax liability.
6. Annual Party Allowance: £150 Each Planning a company event or party? You can spend up to £150 per head (including employees and their families) on an annual event, which is tax-free! Just make sure the event is open to all employees.
7. Make Pension Contributions to Your Personal Pension A great way to save on tax is by making pension contributions. Your company can contribute to your personal pension plan, reducing its tax bill by up to 25%. It’s a win-win for your retirement and tax savings!
Remember: If you don’t use these allowances before 5th April 2025, you’ll lose out! Always consult with a financial advisor to make sure you’re maximising your tax strategy, especially as allowances can change. For pension advice, we highly recommend Alan Cripps, who is superb with all things financial.
Stay ahead of the game and plan now to get the most out of your tax savings!
