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It s not long before the final stage of the tax year draws near. It is essential to make the most of any allowances and tax breaks that are .
By using the annual allowances and exemptions you could potentially reduce your tax charge considerably. This can ordinarily be done quickly and easily with the advice of an ifa.
Tax effective investing
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over 50 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 a regular income and are one of the most tax efficient investment vehicles available
Pensions
Pensions are also a tax efficient way of planning for retirement. Most people can pay up to £3600 gross each tax year and obtain basic rate tax relief on the payment made. Higher rate taxpayers can claim the residual on their self assessment.
Capital Gains Tax Planning
If you have made profits on certain types of investment you may be able to use your yearly capital gains tax allowance. This will enable you to make gains up to this amount without incurring a liability to tax. In many examples it is also viable to carry forward past year’s losses.
Income Tax Opportunities
Each individual can receive 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 worth looking to see who owns the investments and possibly look to transfer assets into the
20% twenty percent taxpayers name.Making annual gifts is also a means of reducing your liability to income tax.
Saving IHT
An individual can give an IHT exempt gift each year of up to Three thousand pounds in a tax year. Any unused allowance can be carried ahead for one yr only. If you are able to make gifts out of income without it altering your standard of living you might be able to make gifts over the annual exemption level.
If you consider your estate could be above the IHT nil rate band then effective tax planning can be employed to reduce your estates potential IHT liability. This could include a suitably drafted will or instead trust planning.
Consilium Asset Management are Financial Advisers based in Bristol.
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