5 Pension contributions Pension contributions should usually be made before the end of the tax year. This advice still stands if you want to carry forward up to £40,000 of unused annual allowance from 2019/20 as 5 April is the last day to do so. Otherwise, the reduction in the additional rate tax threshold in 2023/24 means you may receive more tax relief by delaying your contribution to the new tax year. Income timing The higher rate tax threshold (£50,270 outside Scotland) remains frozen in 2023/24 and the additional rate threshold (outside Scotland) will be cut from £150,000 to £125,140. Accelerating receipt of income to the current tax year could save you tax, although it might also mean you pay (less) tax sooner. If you are a shareholding director, you may want to bring forward a dividend payment to before 6 April 2023. Similarly, you could hasten interest payments by closing a deposit account – but beware of any early closure penalties. Inheritance tax The Autumn Statement froze the inheritance tax (IHT) nil rate band (NRB) and residence nil rate band for another two years, to April 2028. Had the NRB been inflation-proofed since it was fixed in April 2009, it would be over £140,000 higher next April. IHT year end planning takes advantage of the various annual exemptions which, with one limited exception, cannot be carried forward. In 2022/23 lifetime gifts of existing investments are also worth considering, taking advantage of the current CGT annual exempt amount and lower market values. As ever, the sooner you start talking to us about your year end planning options, the better. This is especially the case if you wish to carry forward unused pension annual allowance, which may require slow-to-arrive third party information. B The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change. For specialist tax advice, please refer to an accountant or tax specialist. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit with your overall attitude to risk and financial circumstances. Credit: Karkhut/Shutterstock.com PLANNING Cash is making a comeback Although some retailers are sticking with card payments only for now, increasing numbers of people are returning to cash. More people are now making cash withdrawals and using this money to pay for goods and services. Paying with physical money can help keep of spending and sticking to budgets amid a background of rising prices. CONTROLLING SPENDING The Post Office handled £801m personal cash withdrawals in July – a record figure and an 8% increase on the month before. The Post Office said this change in behaviour suggested that the cost of living was impacting the way people manage their money. It coincides with the rapid rise in food prices and energy costs and seems to suggest that we are still some years away from switching to a cashless society. IMPACT OF THE PANDEMIC This recent uptick comes after years of declining cash payments. Figures show that since 2017 the use of cash for payments has fallen by around 15% a year, with a marked drop in 2020 as the Covid-19 pandemic hit. Many businesses switched to card-only payments to avoid handling notes or coins with the potential of spreading the virus. Of course, most shops and businesses do accept both, but some have continued not to accept cash, for either convenience or security reasons. More people may be relying on cash, but it is worth bearing in mind that businesses do not have to accept cash payments, and are not in fact breaking any rules or regulations by only requesting payments by card.
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