A simple tax and pensions checklist for 2023

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A new year can mean a fresh start for your finances. Tick off our handy checklist to get your tax and pension plans in order and prepare for the end of the tax year on 5 April 2023.

We’re here to help if getting on top of money matters is one of your resolutions for the new year.

Tick off some actions you might need to take in 2023 from our handy to-do list to – whether that’s making the most of your allowances or meeting some key deadlines.

1. Get your tax return in now

The deadline for filing self-assessment tax returns for the 2021-22 tax year is coming up at the end of January. So if you’re in one of the categories of people who need to send a tax return – such as self-employed or earning a taxable income over £100,000 – now’s the time to act.

The deadline for submitting your return online and paying any tax due is midnight on 31 January. MoneyHelper has a guide on who needs to submit a tax return and how to register, if you need some help. 

2. Boost your State Pension

The deadline for paying any voluntary National Insurance (NI) contributions is 5 April each year. You can usually pay voluntary contributions for the past six years.

The number of years you pay NI for can affect whether you qualify for the State Pension and how much you’ll get. So now could be a good opportunity to make up for any lost time.

You can check your NI record or find out more about voluntary NI payments on the government’s website.

3. Get to grips with what’s coming

A lot changed in 2022 and there’s more to come in the new tax year. Get prepared by reading our round-up of the tax and pension changes announced in 2022 that could affect you in the new tax year. 

It outlines what’s happening to the State Pension, updates on tax and pension allowances and cost-of-living support. 

4. Top up your pension

Pension plans are a tax-efficient way to save for your future and with the end of the tax year approaching it’s a good time to make the most of the tax benefits they offer. So if your budget allows, and you’re within your allowance, why not think about increasing your monthly pension contribution or making a one-off payment? 

Thanks to pension tax relief, it normally costs £80 for a basic rate taxpayer to save £100 into their pension plan, so saving more into your plan can actually cost you less than you might think.

Here’s what you need to know about your pension allowances.

Your annual allowance

The pension annual allowance is the total that you, your employer and any third party can pay in across all your pension plans in a tax year. Any more than this and you may get a tax charge. Right now, the standard annual allowance is £40,000 or your total salary, whichever is lower. If you’re nearing your annual allowance, you may be able to make the most of unused allowances from previous tax years to maximise your pension payments. There are some cases where a reduced annual allowance might apply – so do check. To find out more about how this works read our annual allowance guide.

Your lifetime allowance

The lifetime allowance is the total amount you can take from all your pension plans without paying an extra tax charge. It’s currently £1,073,100 and will remain at that level until 2026. You can find out if this might affect you, what the charges are and what to do if your pension pot is close to or beyond the allowance in our lifetime allowance guide.

If you’re a Standard Life customer, simply log in to your account to review your pension payment levels, check your investments and more.

5. Make the most of your capital gains tax exemption before it reduces

The annual exemption on capital gains tax is reducing significantly in the new tax year – from £12,300 down to £6,000. Capital gains tax is the tax you pay on the profit when you sell something that’s increased in value. So if you have something worth selling, you may want to consider doing it before the end of the tax year.

6. Get gifting

You get an inheritance tax-free gift allowance of £3,000 each tax year. This can be carried over to the next tax year but if you don’t use it by the end of that year it’ll be lost. So if you’re planning to make a gift to someone, or have an unused allowance from last year, it might be a good idea to do this before the 2022-23 tax year ends.

7. Use your ISA allowances

Your ISA (Individual Savings Account) allowance is £20,000 for this tax year and the next one. This means you can save up to £20,000 in a Cash or Stocks & Shares ISA, or a combination of both, and not pay any tax when you take your money out.

It’s a tax-efficient way to save, so make the most of this allowance if you can.

Also keep in mind that you get a 25% government bonus on top of anything you save into a Lifetime ISA. Which means each tax year you could get up to an extra £1,000 on top of your savings. So if you’re eligible and haven’t already made the most of this bonus, now could be a good time to consider a top-up before you miss out. You can withdraw money free of penalties from your LISA if you’re:

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

But you’ll pay a 25% withdrawal charge if you withdraw money for any other reason.

The information here is based on our understanding in January 2023 and shouldn’t be taken as financial advice.

A pension is an investment and its value can go down as well as up and may be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.