Annual Tax Planning
It s not very long before the ending of the tax year comes near. It is so important to make the most of any allowances and tax breaks that are available to you.
By using the allowances and exemptions you will potentially reduce your tax charge substantially. This can usually be done quick and easily with the help of a financial advisor.
Tax effective investments
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over fifty your Isa allowance for the actual tax year is now £10,200. ISA’s are free from capital gains tax, can be used to provide a regular income and are one of the most tax efficient investments obtainable
Pensions
Pensions are also a tax efficient way of saving for retirement. Most people can pay in up to 3,600 gross each year and obtain basic rate tax relief on the contribution made. Higher rate taxpayers can claim the remainder on their self assessment.
Capital Gains Tax Planning
If you have made profit on certain types of investment you may be able to use your annual capital gains tax allowance. This will let you to make gains up to this level without incurring a liability to tax. In many cases it is also possible to carry forward previous year’s losses.
Income Tax Planning
Each individual can receive a personal allowance of £6475 without incurring any income tax. For married pairs or civil partnerships, where one is a forty percent taxpayer it is worthwhile looking to see who owns the investments and potentially look to transfer assets into the
20% twenty percent taxpayers name.Making gifts is also a means of keeping down your liability to income tax.
IHT planning
An individual can give an IHT exempt gift each year of up to Three thousand pounds in a tax year. Any unused exemption can be carried ahead for one yr only. If you are able to make gifts out of income without it altering your standard of living you might be able to make gifts above the annual exemption level.
If you consider your estate could be over the Inheritance Tax nil rate band then effective tax planning can be utilized to reduce your estates future inheritance tax liability. This could be a appropriately drafted will or instead trust planning.
Graham Bond is a Financial Adviser based in South Gloucestershire.
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