09/10 Tax Advice
its not long before the final stage of the tax year nears. It is vital to make use of any allowances and tax breaks that are useable.
By using the exemptions and allowances you could potentially reduce your tax charge considerably. This can ordinarily be done promptly and easily with the assistance 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 actual 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 people can contribute up to £3,600 gross each tax 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 profits on certain types of investments you may be able to use your yearly capital gains tax allowance. This will enable you to make gains up to this threshold without incurring a liability to pay tax. In some cases it is also possible to carry forward past year’s losses.
Income Tax Planning
Each individual can receive a personal allowance of £6,475 without incurring any income tax. For wedded couples or civil partnerships, where one is a forty percent taxpayer it is worth looking to see who owns the investments and potentially look to transfer assets into the
BR taxpayers name.Making annual gifts is also a means of keeping down your liability to income tax.
Saving Inheritance Tax
An individual can make an IHT exempt gift each year of up to £3000 in a tax twelvemonth. Any unused exemption can be carried ahead for one yr 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 level.
If you think your estate could be over the IHT nil rate band then efficient tax planning can be applied to reduce your estates future IHT liability. This could be a appropriately drafted will or instead trust planning.
Consilium Asset Management are IFA’s based in South Gloucestershire.
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