End of Year Tax Planning Opportunities
its not very long before the ending of the tax year comes near. It is crucial to make the most of any allowances and tax breaks that are useable.
By using the annual allowances and exemptions you might be able to reduce your tax bill considerably. This can normally be done quick and easily with the help of an ifa.
Tax effective investments
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over fifty 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 that can be used
Pensions
Pensions are also a tax efficient way of planning for retirement. Most individuals can pay in up to £3,600 gross each tax year and obtain basic rate tax relief on the payment. Higher rate taxpayers can claim the residual 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 allow you to make gains up to this amount without receiving a liability to tax. In some cases it is also possible to carry forward previous year’s losses.
Income Tax Planning
Each person can have a personal allowance of 6475 without incurring any income tax. For wedded pairs or civil partnerships, where one is a higher rate taxpayer it is worthwhile looking to see who owns the investment and possibly look to transfer assets into the
basic rate taxpayers name.Making annual gifts is also a means of keeping down your liability to income tax.
Inheritance tax (IHT) planning
An individual can make an IHT exempt gift each year of up to 3,000 in a tax yr. Any unused exemption can be carried ahead for 1 year only. If you are capable 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 over the Inheritance Tax nil rate band then good tax planning can be used to cut back your estates possible IHT liability. This could be a suitably drafted will or instead trust provision.
Consilium Asset Management are Financial Advisers based in Chipping Sodbury, Bristol, South Gloucestershire.
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