its not long before the end of the tax year comes near. It is so important to make use of any personal allowances and tax breaks that are available to you.
By using the exemptions and allowances you could potentially bring down your tax bill substantially. This can usually be done promptly and easily with the advice of an ifa.
Tax effective investing
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 investments obtainable
Pensions
Pensions are also a tax efficient way of saving for retirement. Most individuals can pay in up to three thousand six hundred pounds gross each year and obtain basic rate tax relief on the payment made. 40% taxpayers can claim the balance on their self assessment.
Capital Gains Tax Planning
If you have made profits on certain types of investments you may be able to use your annual capital gains tax allowance. This will enable you to make gains up to this level without incurring a liability to pay tax. In many examples it is also viable to carry forward previous year’s losses.
Income Tax Planning
Each individual can receive a personal allowance of £6475.00 without incurring any income tax. For married pairs or civil partnerships, where one is a 40% taxpayer it is worthwhile looking to see who owns the investment and perhaps look to transfer assets into the
20% twenty percent taxpayers name.Making gifts is also a way of reducing your liability to income tax.
Saving Inheritance Tax
Each individual can give an IHT exempt gift each year of up to 3,000 in a tax twelvemonth. Any unused allowance can be carried forward for one year only. If you are able to make gifts out of income without it affecting your standard of living you may be allowed to make gifts above the yearly exemption limit.
If you consider your estate could be in excess of the Inheritance Tax nil rate band then efficient tax planning can be utilized to reduce your estates possible IHT liability. This could be a suitably drafted will or instead trust provision.
Consilium Asset Management are Independent Financial Advisors based in Bristol, South Gloucestershire.
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