TAXATION - taxing quesitons
Tax is an unavoidable part of life, so it makes sense to get the best tax advice so you know exactly what you owe the taxman - and what you don't.
There are numerous ways in which you can avoid paying too much tax. An IFA offering tax advice might tell you that bumping up your pension contributions before the end of the tax year is a good way to gain generous tax relief and benefit from the tax-efficient treatment of pension funds. An IFA may recommend that you put your savings in an Individual Savings Account or transfer money to your partner who is in a lower tax band.
Not forgetting that an IFA can help you minimise the Income tax and Capital Gains tax you pay whilst mitigating future Inheritance tax bills.
Whether we're talking about the money we earn or the money our savings earn for us, the taxman takes as much as £4 in every £10. But while most of us dislike paying tax, seven out of ten of us bury our heads in the sand instead of doing anything to cut our rising personal tax bills. In fact as a nation we waste a staggering £5.7 billion each year by not taking tax action.
And yet, when it comes to your savings and investments, a few easy tax-planning measures can dramatically cut the tax you pay, giving a healthy boost to the returns you and your family get.
Each year we waste an average £132 per taxpayer in unnecessary payments and missed opportunities. So if we're prepared to squander this much through our own lack of planning – and higher rate taxpayers will waste much more besides – why do we get so wound up about paying our TV licence, car tax and other similar levies? The answer is simple – we can see these taxes going out, but it's often much harder to identify the areas where we're wasting money ourselves.
You don't need to be a financial genius to understand the basic principles, but by seeing a qualified independent financial adviser (IFA) you can see in detail how they apply to your unique financial situation, now and in the future – and ultimately decide what's right for you.
Check out the tips below to see the kinds of areas where you could be saving tax.
1 Tax relief on pensions – Max up your pension contributions before the end of the tax year to gain generous tax relief and then benefit from the tax efficient treatment of pension funds.
2 An ISA's nicer – Individual savings accounts are great for tax breaks if you're saving or investing.
3 Use your other half – A higher rate taxpayer can save tax by transferring money into a lower earning – or non-earning – spouse's name.
4 Make a will – It's the only way to be sure your loved ones don't miss out on their inheritance, and to limit the tax paid on your estate.
5 Check your code – Make sure you have the right tax code or you could be paying over the odds.
6 Rent a room – Many people raise extra income tax-free by renting out a room in their home.
7 Don't get stamped on – You can save literally thousands if you negotiate with the person you are buying a house from to drop the price below stamp duty thresholds.
8 Company car? – Fill in a form to declare it as a taxable perk. Broadly speaking, the smaller the vehicle, the less tax you will pay.
9 Made a gain? – Make sure you take full advantage of your annual capital gains tax exemption limit.
10 Keep it in the family – The kids get their own personal tax allowance too, and you can set up tax-efficient trusts for children or grandchildren.
We offer the first consultation free of charge, giving you an opportunity to find out more about our expertise and how we will be able to help you. Contact us today for your free no-obligation consultation.
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