Annual Tax Planning
It s not long before the ending of the tax year nears. It is vitally important to make use of any allowances and tax breaks that are useable.
By using the annual allowances and exemptions you might possibly bring down your tax bill considerably. This can commonly be done promptly and easily with the assistance of an independent financial adviser.
Tax effective investing
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 investment products that can be used
Pensions
Pensions are also a tax effective way of planning for retirement. Most individuals can contribute up to 3,600 gross each yr and obtain basic rate tax relief on the payment made. Forty percent taxpayers can claim the balance on their self assessment.
Capital Gains Tax Planning
If you have made gains on certain types of investment you may be able to use your annual capital gains tax allowance. This will allow you to make gains up to this amount without incurring a liability to pay tax. In some examples it is also possible to carry forward past year’s losses.
Income Tax Planning
Each person can receive a personal allowance of £6,475 without incurring any income tax. For wedded pairs or civil partnerships, where one is a high rate taxpayer it is worth looking to see who owns the investment and potentially look to transfer assets into the
basic rate taxpayers name.Making gifts is also a way of cutting your liability to income tax.
Inheritance Tax Planning
Each person can make an IHT exempt gift each year of up to Three thousand pounds in a tax year. Any unused exemption can be carried forward for one year only. If you are able to make gifts out of income without it changing your standard of living you may be allowed to make gifts over the annual exemption limit.
If you consider your estate could be in excess of the Inheritance Tax nil rate band then good tax planning can be used to bring down your estates future inheritance tax liability. This could be a suitably drafted will or instead trust provision.
Graham Bond is a Financial Adviser based in Bristol, South Gloucestershire.
If you are a ifa we have established Financial Vision. Financial Vision provides an financial adviser web site design implementation service to the financial services industry.
