End of Year Tax Planning
It s not long before the final stage of the tax year nears. It is essential to make use of any allowances and tax breaks that are useable.
By using the exemptions and annual allowances you might possibly bring down your tax bill considerably. This can commonly be done promptly 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 current tax year is now £10,200. ISA’s are free from capital gains tax, can be used to provide an annual income and are one of the most tax efficient investment vehicles obtainable
Pensions
Pensions are also a tax efficient way of saving for retirement. Most people can pay up to £3600 gross each tax year and obtain basic rate tax relief on the payment. Higher rate taxpayers can claim the remainder on their self assessment.
Capital Gains Tax Opportunities
If you have made profit on certain types of investments you may be able to use your yearly capital gains tax allowance. This will allow you to make gains up to this threshold without acquiring a liability to tax. In some examples it is also possible to carry forward previous year’s losses.
Income Tax Opportunities
Each individual can have a personal allowance of £6475.00 without incurring any income tax. For espoused couples or civil partnerships, where one is a forty percent taxpayer it is worthwhile looking to see who owns the investment and perhaps look to transfer assets into the
BR taxpayers name.Making annual gifts is also a way of cutting your liability to income tax.
Inheritance tax (IHT) planning
A person can give an IHT exempt gift each year of up to 3,000 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 affecting your standard of living you may be able to make gifts over the annual exemption limit.
If you believe your estate could be above the IHT nil rate band then efficient tax planning can be utilized to cut your estates potential inheritance liability. This could include a suitably drafted will or alternatively trust planning.
Consilium Asset Management are Financial Advisers based in Chipping Sodbury South Gloucestershire.
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