End of Year Tax Saving Opportunities
It s not very long before the ending of the tax year draws near. It is important to make the most of any personal allowances and tax breaks that are available.
By using the allowances and annual exemptions you will reduce your tax charge substantially. This can commonly be done quick and easily with the advice of a financial adviser.
Tax effective investments
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 an income and are one of the most tax efficient investment vehicles that can be used
Pensions
Pensions are also a tax effective way of saving for retirement. Most individuals can pay in up to £3,600 gross each year and obtain basic rate tax relief on the payment made. Forty percent 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 yearly capital gains tax allowance. This will let you to make gains up to this amount without receiving a liability to tax. In many examples it is also possible to carry forward previous year’s losses.
Income Tax Opportunities
Each individual can receive a personal allowance of £6475 without incurring any income tax. For wedded couples or civil partnerships, where one is a 40% taxpayer it is worth looking to see who owns the investment and potentially 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 opportunities
Every Person can give an IHT exempt gift each year of up to 3,000 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 altering your standard of living you may be able to make gifts over the yearly exemption limit.
If you believe your estate could be over the Inheritance Tax nil rate band then efficient tax planning can be applied to cut back your estates potential IHT liability. This could include a appropriately drafted will or instead trust provision.
Consilium Asset Management are Financial Advisors based in Chipping Sodbury South Gloucestershire.
If you are a financial adviser we have established Financial Vision. Financial Vision provides an IFA web site design implementation service to the financial services industry.
