Bringing forward income could be a sensible approach if you are not currently an additional rate taxpayer but expect to become one next year.

  • If your income is less than £125,140 this year but is expected to exceed that figure next year, you could bring forward income into 2023/24 to avoid the additional or top rate next year.
  • Conversely, if your income will fall below £125,140 in 2024/25, you might be able to avoid the additional or top rate of income tax this year by delaying a bonus until after
    6 April 2024.

You could consider a similar strategy to keep your income below the level at which you would lose your personal allowance. Alternatively, you could sacrifice salary to bring your income below any of the thresholds in exchange for a tax-free employer's pension contribution or a low-emission company car.

If you have had to work from home this year, you can claim a tax-free amount of £312 for 2023/24 to cover the additional costs involved (provided your employer does not reimburse them). You can use HMRC's online portal before 6 April 2024 so that you receive the benefit via your PAYE code for 2023/24. However, this relief is only available if you have to work from home, not if you merely choose to do so.

Other considerations

  • This is also a good time to review your company car situation, especially if you have been working from home and expect this to continue long term. If you are hardly using your company car, you can return it to your employer to remove the tax charge. Alternatively, switching to a fully electric car or an ultra-low emission hybrid with a high electric motoring range will drastically lower your tax cost. Such a switch will also save tax and NICs for your company.
  • If you are going to work abroad for more than a year, it may help to leave the UK before 6 April 2024. There are complex rules around residency, so you should seek specific advice.

Dividends

The current dividend tax-free allowance of £1,000 will fall to £500 in 2024/25. If you are the owner of a limited company, it would be wise to ensure you make use of the dividend tax-free allowance for 2023/24 Similarly, if you are a higher rate taxpayer and may become an additional rate taxpayer in 2024/25 (or Scottish top rate taxpayer), you could bring forward a dividend to avoid the additional rate (or Scottish top rate) next year. This could also help if the income falls into the basic rate band this year (or Scottish starter, basic or intermediate rate bands). But you should avoid bringing forward a dividend if it is more likely to fall into a higher band this year than next year.

You could even give shares to your spouse or civil partner shortly before paying a dividend if they pay tax at a lower rate than you, provided you genuinely transfer ownership. It is advisable to leave as much time as possible between the gift and the subsequent dividend payment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.