Spring Clean Your Finances

This month welcomed the new Tax Year, that started back on 6^th April. We look at a number of checks you can make to ensure your finances are given the ‘spring clean’ for the year ahead.

Tax codes

New tax codes for the financial year ahead came into force on 6^th April. However, it’s worth checking if they are correct for you and your current circumstances – especially as it’s your responsibility to check that it’s correct, rather than your employer, or HMRC¹.

One way to check whether your tax code is correct is visiting an online calculator, such as the one hosted on the Government web pages at https://www.gov.uk/check-income-tax-current-year

Self-employed roles

If you are in a self-employed role, the recent changes to National Insurance (NI) mean you should check how much to set aside in the wake of changes to NI contributions in the March budget.

Changes to the Individual Savings Account (ISA) rules

This tax year there’s no limit to the number of ISAs you can open. It’s one of the biggest changes to the rules to come into effect on 6 April; previously you could only open one of each type every tax year.²

Lifetime ISAs (LISA)

One of the less well-known ISAs is the LISA or Lifetime ISA, which can be used to help buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA.³

You can put in up to £4,000 each year until you’re 50. You must make your first payment into your ISA before you’re 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.³

The Lifetime ISA limit of £4,000 counts towards your annual ISA limit of £20,000. You can hold cash or stocks and shares in your Lifetime ISA or have a combination of both.

When you turn 50, you will not be able to pay into your Lifetime ISA or earn the 25% bonus. Your account will stay open and your savings will still earn interest or investment returns.

You can withdraw money from your ISA if you are:

• buying your first home
• aged 60 or over
• terminally ill, with less than 12 months to live

However, you will pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason.³

Sources

1. The Times (2024) How to check your tax code and what it means. Available at: https://www.thetimes.co.uk/money-mentor/income-budgeting/tax/what-is-my-tax-code-changed-check [Accessed 17th April 2024]
2. National Savings & Investments (2024) What do the new ISA changes mean for you?. Available at: https://www.nsandi.com/isa-changes [Accessed 17th April 2024]
3. Gov.uk (2024) Lifetime ISA. Available at: https://www.gov.uk/lifetime-isa [Accessed 17 April 2024]

All the information in this article is correct as of the publish date 25^th April 2024. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.