09/10 Tax Advice
its not long before the ending of the tax year draws near. It is crucial to make use of any personal allowances and tax breaks that are useable.
By using the exemptions and annual allowances you might be able to bring down your tax charge substantially. This can usually be done quickly 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 an annual income and are one of the most tax efficient investments that can be used
Pensions
Pensions are also a tax effective way of planning for retirement. Most individuals can pay up to £3600 gross each year and obtain basic rate tax relief on the contribution made. Forty percent taxpayers can claim the residue on their self assessment.
Capital Gains Tax Opportunities
If you have made profit 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 receiving a liability to tax. In many cases it is also viable to carry forward previous year’s losses.
Income Tax Planning
Each individual can have a personal allowance of £6475.00 without incurring any income tax. For wedded pairs or civil partnerships, where one is a forty percent taxpayer it is worthwhile looking to see who owns the investment and potentially 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
A person can give an IHT exempt gift each year of up to Three thousand pounds in a tax yr. Any unused exemption can be carried ahead for one year only. If you are able to make gifts out of income without it changing your standard of living you might be able to make gifts over the annual exemption limit.
If you think your estate could be in excess of the Inheritance Tax nil rate band then efficient tax planning can be used to reduce your estates future IHT liability. This could include a appropriately drafted will or alternatively trust provision.
Graham Bond is a Financial Adviser based in Bristol, South Gloucestershire.
If you are a ifa we have set up Financial Vision. Financial Vision supplies an financial advisor web site design service to the financial services industry.