It s not very long before the final stage of the tax year comes near. It is vital to make the most of any allowances and tax breaks that are useable.
By using the annual allowances and exemptions you might possibly bring down your tax bill substantially. This can normally be done quick 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 income and are one of the most tax efficient investment vehicles available
Pensions
Pensions are also a tax efficient way of planning for retirement. Most individuals can pay up to £3600 gross each yr and obtain basic rate tax relief on the contribution. Higher rate taxpayers can claim the balance on their self assessment.
Capital Gains Tax Planning
If you have made gains on certain types of investment you may be able to use your annual capital gains tax allowance. This will enable you to make gains up to this amount without getting a liability to tax. In many cases it is also possible to carry forward previous year’s losses.
Income Tax Opportunities
Each person can receive a personal allowance of 6475 without acquiring any income tax. For married couples or civil partnerships, where one is a higher rate 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 keeping down your liability to income tax.
Inheritance tax (IHT) planning
Each individual can make an IHT exempt gift each year of up to £3000 in a tax yr. Any unused allowance can be carried ahead for 1 yr only. If you are able to make gifts out of income without it affecting your standard of living you may be able to make gifts above the yearly exemption level.
If you consider your estate could be over the IHT nil rate band then good tax planning can be employed to bring down your estates potential inheritance tax liability. This could include a appropriately drafted will or alternatively trust planning.
Consilium Asset Management are IFA’s based in Bristol.
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