its not very long before the close of the tax year draws near. It is vital to make use of any personal allowances and tax breaks that are available.
By using the annual exemptions and allowances you might be able to reduce your tax bill substantially. This can commonly be done quick and easily with the help of an ifa.
Tax effective investing
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over 50 your Isa allowance for the present 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 available
Pensions
Pensions are also a tax effective way of planning for retirement. Most people can pay up to £3600 gross each year and obtain basic rate tax relief on the contribution made. 40% taxpayers can claim the residue on their self assessment.
Capital Gains Tax Opportunities
If you have made gains 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 level without receiving a liability to pay tax. In some examples it is also viable to carry forward past year’s losses.
Income Tax Opportunities
Each individual can have a personal allowance of £6475 without incurring any income tax. For married couples or civil partnerships, where one is a high rate taxpayer it is worthwhile looking to see who owns the investments and perhaps look to transfer assets into the
basic rate taxpayers name.Making gifts is also a means of keeping down your liability to income tax.
Inheritance Tax Planning
Every Person can give an IHT exempt gift each year of up to £3000 in a tax year. Any unused allowance can be carried ahead for 1 yr only. If you are able to make gifts out of income without it affecting your standard of living you might be allowed to make gifts over the annual exemption level.
If you believe your estate could be in excess of the IHT nil rate band then good tax planning can be utilized to cut back your estates potential inheritance tax liability. This could include a appropriately drafted will or instead trust provision.
Consilium Asset Management are Financial Advisors based in Bristol, South Gloucestershire.
If you are a ifa we have launched Financial Vision. Financial Vision supplies an financial adviser web site design service to the financial services industry.