09/10 Tax Advice
28/01/2010 22:25
on: Financial World, Money Making
It s not very long before the close of the tax year nears. It is vitally important to make use of any allowances and tax breaks that are .
By using the annual allowances and exemptions you will bring down your tax charge considerably. This can ordinarily be done quickly and easily with the help of an ifa.
Tax effective investing
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over 50 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 up to three thousand six hundred pounds gross each tax year and obtain basic rate tax relief on the contribution. Forty percent taxpayers can claim the remainder 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 allow you to make gains up to this threshold without getting a liability to pay tax. In many 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 married couples or civil partnerships, where one is a 40% taxpayer it is worth looking to see who owns the investment and possibly look to transfer assets into the
basic rate taxpayers name.Making gifts is also a means of reducing your liability to income tax.
Inheritance Tax opportunities
Each person can make an IHT exempt gift each year of up to Three thousand pounds in a tax yr. Any unused exemption can be carried forward for one year only. If you are able to make gifts out of income without it changing your standard of living you may be allowed to make gifts over the annual exemption level.
If you believe your estate could be above the IHT nil rate band then efficient tax planning can be applied to cut your estates future inheritance tax liability. This could include a appropriately drafted will or alternatively trust planning.
Consilium Asset Management are Financial Advisors based in Chipping Sodbury, Bristol.
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