2009/2010 Tax Strategies
7 February 2010
It s not very long before the close of the tax year nears. It is vital to make the most of any allowances and tax breaks that are available.
By using the allowances and annual exemptions you will potentially bring down your tax bill considerably. This can normally be done quickly and easily with the assistance of a financial adviser.
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 a regular income and are one of the most tax efficient investment vehicles obtainable
Pensions
Pensions are also a tax effective way of planning for retirement. Most individuals can pay up to £3,600 gross each tax year and obtain basic rate tax relief on the payment. Forty percent taxpayers can claim the residual on their self assessment.
Capital Gains Tax Opportunities
If you have made gains on certain types of investment you may be able to use your yearly capital gains tax allowance. This will allow you to make gains up to this amount without getting a liability to tax. In some cases it is also viable to carry forward previous year’s losses.
Income Tax Opportunities
Each person can receive a personal allowance of £6475.00 without acquiring any income tax. For married couples 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
BR taxpayers name.Making gifts is also a means of reducing your liability to income tax.
Inheritance Tax opportunities
Every Person can give an IHT exempt gift each year of up to Three thousand pounds in a tax twelvemonth. 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 might be allowed to make gifts over the yearly exemption level.
If you consider your estate could be above the Inheritance Tax nil rate band then efficient tax planning can be applied to reduce your estates likely inheritance liability. This could be a suitably drafted will or alternatively trust provision.
Consilium Asset Management are IFA s based in Chipping Sodbury, Bristol.
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