Earning & investing - What taxes are impacting you more now

What do I need to know?

In the most recent Autumn Budget, Chancellor Jeremy Hunt announced a number of changes that will impact your ability to achieve your lifetime wealth ambitions. 

From 6 April 2023, the main personal tax changes to be aware of are: 

• The reduction in the threshold above which the 45% additional rate of tax is payable
• The reduction of the tax free dividend allowance from £2,000 to £1,000 (and further reducing the following year)
• The reduction of the CGT exemption from £12,300 to £6,000 (and further reducing the following year)

Why does it matter?

These changes mean that in the current environment, making the best use of tax-efficient wrappers such as  pensions and ISAs is all the more important. 

In addition, if you earn between £100,000 and £125,140, the tapering of the personal allowance means you  could end up paying 60% tax. 

This 60% ‘tax trap’ isn’t published in any HMRC guidelines because it’s an unofficial effective rate of Income  Tax. It occurs due to the tapering of the personal allowance for higher earners. 

The result? Those earning between £100,000 and £125,140 can end up paying 60% tax.

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What to do?

It all starts with you, taking into account your personal goals and circumstances: 

• What are your ambitions for the future? 
• What’s most important for you to achieve? 
• When do you want to do these things? 

Write down your answers, and then look at your current plan. Is it on track? 

Could or should you be doing better – better planning, better efficiencies, better understanding? 

Speaking with a professional adviser can give you clarity on your options and work with you to tailor a plan that  works towards your ambitions. 

Tax rules change frequently but financial advice can help make sure you stay tax-smart, and always pay what  you owe, and no more.

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Author of this article

Charlie Channing-Williams provides bespoke financial advice to individuals, families and business owners. He  does this this through lifetime wealth planning, based on their unique circumstances and ambitions. 

charlie.channing-williams@sjpp.co.uk | +44 (0)7778 708968 | www.channing-williamswealth.co.uk

Important note

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected  and may fall as well as rise. You may get back less than the amount invested. 

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances. 

Channing-Williams Wealth Management is an Appointed Representative of and represents only St. James's Place  Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose  of advising solely on the group's wealth management products and services, more details of which are set out on the group's website www.sjp.co.uk/products. The 'St. James's Place Partnership' and the titles 'Partner' and  'Partner Practice' are marketing terms used to describe St. James's Place representatives.

SJP APPROVED 26/4/2023

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