2009/2010 Tax Planning
its not very long before the end of the tax year draws near. It is so important to make use of any personal allowances and tax breaks that are useable.
By using the allowances and annual exemptions you could potentially bring down your tax bill substantially. This can usually be done quick and easily with the help of a financial adviser.
Tax effective investing
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 obtainable
Pensions
Pensions are also a tax effective way of planning for retirement. Most people can contribute up to 3,600 gross each tax year and obtain basic rate tax relief on the payment made. Higher rate taxpayers can claim the remainder 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 allow you to make gains up to this threshold without incurring a liability to tax. In many 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 acquiring any income tax. For married pairs or civil partnerships, where one is a high rate taxpayer it is worth looking to see who owns the investments and potentially look to transfer assets into the
basic rate taxpayers name.Making gifts is also a means of keeping down your liability to income tax.
Inheritance tax (IHT) planning
Each person can give an IHT exempt gift each year of up to Three thousand pounds in a tax twelvemonth. Any unused allowance can be carried forward for 1 year 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 think your estate could be over the IHT nil rate band then good tax planning can be employed to cut back your estates likely IHT liability. This could include a appropriately drafted will or alternatively trust planning.
Consilium Asset Management are IFA s based in Chipping Sodbury South Gloucestershire.
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