Planning for directors and employees

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.

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