UK tax year end: five things high net worth investors need to do now to protect their wealth

The UK tax year end for 2024 is little more than a fortnight away, which means a whole host of personal finance changes are on the way.

Alongside the annual £20,000 ISA allowance refresh, this April will see five key ISA rule changes. It’s also worth keeping an eye on your tax code to make sure you’re paying what you should be.

Workers will be in line for another cut to National Insurance rates, while the child benefit threshold will rise to £60,000. MoneyWeek has rounded up all the key things you need to know in our 10-point end of financial year checklist.

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Although 5 April is still a little way off, the tax year end deadlines for wealthy investors are coming thick and fast - particularly given that Easter is taking out two working days between now and then.

Nicholas Hyett, investment manager at the investment service Wealth Club says: “If you’re a high net worth or sophisticated investor, then the tax year end starts early. Despite some tweaks at the Spring Budget, tax rates remain at the highest levels in decades – especially for wealthier investors.

“Venture capital schemes that offer generous tax relief for supporting young UK businesses help to alleviate some of that pressure. But, unlike your annual ISA subscription, you can’t afford to leave it until the last minute. Many tax efficient investment funds close before the end of March, and popular VCT offers may close even before that.”

So, if you’re a wealthy investor, what steps do you need to take now to safeguard your money? Below are five things to note and when you need to action them.

Invest in an EIS fund before the UK tax year ends

If you can stomach the high levels of risk, there are generous tax breaks (and large potential gains) to be had if you invest in Enterprise Investment Scheme (EIS) funds.

The scheme, which has been active since 1994, makes it easier for early-stage businesses to raise funding. In exchange for their money, investors can claim income tax relief on up to £1 million of their investment each financial year and do not have to pay capital gains tax. They are also eligible for loss relief if things go badly for the company they’ve invested in.

There are two main ways to invest in EIS. One method is to do a single-company investment. Investing via this route requires a lot of research into the company you’re considering buying shares in and should only really be undertaken by those who have knowledge of the potential positives and pitfalls of EIS. This route is unlikely to be feasible given how close to the tax year end we are.

The other option is to invest through a specialist fund manager. Doing so allows you to take advantage of the manager’s expertise and spread your risk, although it will come at a price.

While the window for direct investments into qualifying companies is likely to run up to the tax year end, Wealth Club says most EIS funds are now closed.

However, it has said one or two remain open until 28 March, including Fuel Ventures Follow-on EIS Fund, Parkwalk Opportunities EIS Fund and Haatch EIS Fund. So, you'll have to take urgent action if you’re to take advantage of this tax efficient route.

Opt for a Knowledge-Intensive EIS fund

This specific type of EIS fund offers slightly different reliefs for investors who put their money into young companies which are conducting research, development or innovation.

From an investor’s perspective, the main difference between a Knowledge-Intensive EIS and the standard form of EIS is in the amount of income tax relief that’s available. You can claim relief on a maximum annual investment of £2m across both forms of EIS so long as at least £1m of it is in a Knowledge-Intensive EIS.

The deadlines are also slightly more relaxed. Wealth Club says they range from 28 March to 5 April. It singled out several funds that are still accepting investment for the 2023/24 tax year, including:

Put money into a Venture Capital Trust (VCT)

Another way to secure tax relief is to invest in a VCT. These work in a similar way to investment trusts but come with investor tax breaks to encourage the growth of particular sectors

To be classed as a VCT, the trust predominantly has to fund small businesses operating in particular sectors that the government deems need additional support. The firms also usually have to be under seven years old.

The tax breaks on offer are slightly different to those you can access through EIS funds. The maximum annual investment you can claim against is £200,000 a year and you get tax-free dividends and capital gains.

2023/24 tax year deadlines for most VCTs are on 5 April, although you may have to move faster for some if you want to qualify for discounts or dividend payments.

Utilise your SIPP allowance

A tax efficient way to put money aside for your retirement, particularly in light of the current high levels of income tax, a self invested personal pension allows you to lock away up to £60,000 a year. A key thing to note is that you can’t invest more than you’ve earned in a particular financial year.

The deadline to use up your 2023/24 SIPP allowance is theoretically midnight on 5 April. However, you need to factor in the time it takes for bank transfers to clear, so it may be worth avoiding the stress and getting it done ahead of 5 April. MoneyWeek has rounded up how to pick a SIPP, as well as the most popular SIPPs out there. 

Make the most of the higher CGT allowance

One way to save on your tax bill is to make the most of the higher capital gains tax-free allowance before it halves on 6 April.

At the moment, you can make £6,000 before you have to pay tax, but this is dropping to £3,000 when the next tax year gets underway. So, if you’ve got large gains, it could be worth selling shares to make the most of the existing allowance before it gets slashed.