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Why it pays to get organised with money It’s important to make the most of your money and get off to a good start this new tax year.

Don’t leave investing to last-minute – you’ll miss out on thousands of pounds

How much we can earn without paying income tax has remained the same in 2023/24 tax year at £12,570.

Earn over £12,570 and we pay 20% income tax on the next £37,700 we receive (that figure has also remained the same this year), and after that it is 40% on income up to £125,140.

Above that, income is taxed at 45%. This has reduced from £150,000 in the last tax year, meaning more high earners will pay 45% income tax.

In addition to income tax, we also pay national insurance (tax) on everything we earn.

There is no national insurance payable on the first £12,570 we make – a significant increase from £9,880 last year, saving us up to £322pa.

Then we pay 12% National Insurance (a reduction from the 13.25% last year when the government set up a post-pandemic Health and Social Care Levy) up to £50,284, and then 2% on income above that – a reduction from 3.25% due to the removal of the Health and Social Care Levy. If we sell an

investment asset such as a share or a buy-to-let property and we make a gain, we pay capital gains tax on any profit over our capital gains tax allowance, which has significantly reduced from £12,300 to £6,000.

The rate of tax payable on capital gains is 10% or 20%, depending on our income and the size of the gain.

For buy-to-let properties, the capital gains tax rates have increased by an additional 8% to 18% and 28%, unchanged since last tax year.

Our tax-free ISA allowance remains at £20,000. You can also invest £9,000 into a Junior ISA for children under the age of 18 each year.

If you’re aged 18 to 40, you can invest up to £4,000 into a Lifetime ISA and receive a 25% bonus on the contribution of up to £1,000.

Be aware, however, that your LISA funds must be used to help purchase your first home up to a limit of £450,000 or put towards your retirement from age 60.

Many people leave investing into their ISAs until the last minute, but that could mean leaving thousands of pounds on the table.

Investing the full £20,000 into an ISA at the end of the tax year for 20 years at a 9%pa growth rate would produce a fund of £1,023,202.

But if you invested at the start of the tax year instead, you’d have £1,115,291 – a whopping £92,089 more, just for getting yourself organised.

You continue to be able to put up to 100% of your income and taxable benefits into a pension, up to a limit of £60,000 annually.

This is a £20,000 increase from last year, however this could be reduced if you earn over £200,000.

If your income is below £3,600, you can still pay £2,880 into a pension and receive 25% tax relief (£720) to help save for your retirement.

You can even set up a pension for a newborn baby.

You can also benefit from saving into a pension early: saving £2,880pa at the start of the tax year from age 21 to 66 at 9%pa produces a fund of £2,063,470, whereas leaving it to the end of the tax year produces a fund of £1,893,091. That’s an extra £170,379 just for saving early.

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