End of Year Tax Reduction Plans
its not long before the ending of the tax year comes near. It is crucial to make the most of any personal allowances and tax breaks that are .
By using the annual exemptions and allowances you could potentially reduce your tax bill considerably. This can commonly be done promptly and easily with the help of an ifa.
Tax effective investing
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over fifty 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 annual income and are one of the most tax efficient investment products obtainable
Pensions
Pensions are also a tax effective way of planning for retirement. Most people can contribute up to 3,600 gross each yr and obtain basic rate tax relief on the payment. Higher rate taxpayers can claim the balance 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 annual capital gains tax allowance. This will let you to make gains up to this amount without receiving a liability to tax. In many cases it is also viable to carry forward past year’s losses.
Income Tax Planning
Each individual can receive a personal allowance of £6,475 without acquiring any income tax. For married pairs or civil partnerships, where one is a 40% taxpayer it is worthwhile looking to see who owns the investments and possibly look to transfer assets into the
BR taxpayers name.Making annual gifts is also a means of cutting your liability to income tax.
Inheritance Tax Planning
Every individual can make an IHT exempt gift each year of up to £3000 in a tax yr. Any unused exemption can be carried forward for 1 year 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 above the yearly exemption limit.
If you think your estate could be above the Inheritance Tax nil rate band then good tax planning can be employed to reduce your estates potential IHT liability. This could include a suitably drafted will or alternatively trust planning.
Consilium Asset Management are Independent Financial Advisors based in Chipping Sodbury, Bristol, South Gloucestershire.
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