Page 7 - Budget Newsletter - March 2023
P. 7
Planning Point
The two successive halvings of the dividend allowance underline the value of the dividend tax
shelter provided by ISAs. Beyond ISAs, investment bonds and pension arrangements can also
provide some shelter.
The starting rate tax band
The starting rate band for savings income was launched at £5,000 in 2016/17 and at a tax rate of 0%,
and will remain on that basis for 2023/24. Sadly, most people are not able to take advantage of the
starting rate tax band: if your earnings and/or pension income exceed £17,570 in 2023/24, then that
probably includes you. However, if you (or your partner) do qualify, you will need to ensure you have
the right type of investment income to pay 0% tax.
Planning Point
If you don’t anticipate using all your personal allowance or PSA in the current tax year, think
about creating more income by closing deposit accounts before 6 April and crystallising the
interest in this tax year. You may even find a better rate with a new provider, but beware of early
closure penalties.
For 2023/24, consider who should own what in terms of investments and savings. Increased
savings income and reduced dividend allowances mean it is not simply a question of loading as
much as possible on the lowest rate taxpayer of a couple. In theory, you will each be able to
receive an income of up to £19,570 tax free in 2023/24, but only if you have the right mix of
earnings, savings income and dividends.
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