End of Year Tax Strategies
It s not long before the close of the tax year draws near. It is very important to make the most of any allowances and tax breaks that are .
By using the annual exemptions and allowances you might be able to reduce your tax bill considerably. This can normally be done promptly and easily with the help of a financial advisor.
Tax effective investing
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 an annual 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 people can pay in up to £3600 gross each twelvemonth and obtain basic rate tax relief on the payment. Forty percent taxpayers can claim the residual on their self assessment.
Capital Gains Tax Planning
If you have made profits on certain types of investments you may be able to use your annual capital gains tax allowance. This will allow you to make gains up to this level without acquiring a liability to tax. In some examples it is also possible to carry forward past year’s losses.
Income Tax Planning
Each person can receive a personal allowance of £6475.00 without acquiring any income tax. For espoused couples or civil partnerships, where one is a forty percent taxpayer it is worth looking to see who owns the investments and possibly look to transfer assets into the
basic rate taxpayers name.Making annual gifts is also a means of cutting your liability to income tax.
Inheritance Tax Planning
Every Person can give an IHT exempt gift each year of up to 3,000 in a tax twelvemonth. Any unused exemption can be carried forward for one yr only. If you are able to make gifts out of income without it changing your standard of living you may be able to make gifts above the yearly exemption level.
If you believe your estate could be over the Inheritance Tax nil rate band then good tax planning can be applied to bring down your estates likely inheritance liability. This could be a appropriately drafted will or instead trust provision.
Consilium Asset Management are independent financial advisers based in Bristol.
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