Year End Tax Advice

02.13.10 |

its not very long before the final stage of the tax year nears. It is very important to make use of any personal allowances and tax breaks that are obtainable.
By using the allowances and annual exemptions you will reduce your tax bill substantially. This can normally be done promptly and easily with the assistance of a financial adviser.

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 investment products available

Pensions

Pensions are also a tax efficient way of saving for retirement. Most individuals can pay in up to 3,600 gross each year and obtain basic rate tax relief on the contribution made. 40% taxpayers can claim the balance on their self assessment.

Capital Gains Tax Planning

If you have made profits on certain types of investment you may be able to use your yearly 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 viable to carry forward previous year’s losses.

Income Tax Opportunities

Each individual can receive a personal allowance of £6475.00 without acquiring any income tax. For wedded couples or civil partnerships, where one is a higher rate 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 gifts is also a means of reducing your liability to income tax.

Inheritance tax (IHT) planning

A person can make an IHT exempt gift each year of up to Three thousand pounds in a tax yr. Any unused allowance can be carried forward for 1 yr only. If you are able to make gifts out of income without it altering your standard of living you may be able to make gifts over the yearly exemption limit.

If you consider your estate could be in excess of the IHT nil rate band then good tax planning can be utilized to cut your estates possible inheritance tax liability. This could be a suitably drafted will or alternatively trust provision.

Graham Bond is a Financial Advisor based in South Gloucestershire.

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