09/10 Tax Strategies
It s not long before the close of the tax year comes near. It is so important to make the most of any personal allowances and tax breaks that are obtainable.
By using the exemptions and allowances you will potentially bring down your tax charge substantially. This can normally be done quick and easily with the assistance of an ifa.
Tax effective investments
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over 50 your Isa allowance for the current 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 investments that can be used
Pensions
Pensions are also a tax effective way of saving for retirement. Most people can contribute up to 3,600 gross each year and obtain basic rate tax relief on the contribution. 40% taxpayers can claim the residual on their self assessment.
Capital Gains Tax Planning
If you have made profit 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 level without incurring a liability to tax. In some examples it is also viable to carry forward past year’s losses.
Income Tax Opportunities
Each individual can have a personal allowance of 6475 without incurring any income tax. For married pairs or civil partnerships, where one is a forty percent taxpayer it is worth looking to see who owns the investment and possibly look to transfer assets into the
20% twenty percent taxpayers name.Making annual gifts is also a means of cutting your liability to income tax.
IHT planning
Each individual can make an IHT exempt gift each year of up to 3,000 in a tax twelvemonth. Any unused allowance can be carried forward for one yr only. If you are able to make gifts out of income without it affecting your standard of living you might be allowed to make gifts over the yearly exemption limit.
If you consider your estate could be over the Inheritance Tax nil rate band then effective tax planning can be used to bring down your estates possible IHT liability. This could include a suitably drafted will or instead trust planning.
Consilium Asset Management are IFA’s based in Chipping Sodbury South Gloucestershire.
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