Year End Tax Planning Opportunities
its not long before the end of the tax year nears. It is vitally important to make use of any personal allowances and tax breaks that are useable.
By using the exemptions and annual allowances you will reduce your tax bill considerably. This can usually be done quick and easily with the assistance of a financial adviser.
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 available
Pensions
Pensions are also a tax effective way of planning for retirement. Most individuals can pay up to £3,600 gross each tax year and obtain basic rate tax relief on the contribution made. 40% taxpayers can claim the residual on their self assessment.
Capital Gains Tax Opportunities
If you have made profits on certain types of investments you may be able to use your yearly capital gains tax allowance. This will let you to make gains up to this threshold without getting a liability to tax. In some cases it is also viable to carry forward past year’s losses.
Income Tax Planning
Each individual can receive a personal allowance of £6,475 without acquiring any income tax. For married pairs or civil partnerships, where one is a high rate taxpayer it is worthwhile looking to see who owns the investment and possibly look to transfer assets into the
BR taxpayers name.Making annual gifts is also a way of reducing your liability to income tax.
Saving IHT
Every Person can make an IHT exempt gift each year of up to 3,000 in a tax yr. Any unused exemption can be carried forward for 1 year only. If you are capable to make gifts out of income without it altering your standard of living you may be able to make gifts above the annual exemption limit.
If you think your estate could be above the Inheritance Tax nil rate band then effective tax planning can be used to cut your estates likely inheritance tax liability. This could be a suitably drafted will or instead trust provision.
Consilium Asset Management are independent financial advisers based in Chipping Sodbury, Bristol.
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