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Tax Planning

The taxman takes as much as £4 in every £10 of our savings or our earnings. Yet, with a few easy tax-planning measures it is possible avoid but at least some of these taxes and cut the tax you pay, giving a healthy boost to the returns for you, your family, and your business. We as Independent Financial Planners are always aware of the need to take the client´s tax position into account in our consideration of their circumstances. The Financial Services Authority does not regulate some forms of tax advice or will writing. The areas we will look at are:

Inheritance Tax-Not many people think about Inheritance Tax (IHT) or are even aware it exists. After all, it's not something that normally affects us whilst we're alive. For those that are aware of it they sometimes think that only the wealthy or elderly need to worry about it. But you do not have to be rich for your estate to be subject to Inheritance Tax. It is levied on everything you leave over the nil rate band. We advise on

• drawing up and reviewing your will
• making full use of exemptions and reliefs on lifetime transfers
• optimising lifetime transfers between spouses
• transferring assets into trust
• arranging adequate life assurance to cover potential inheritance tax liabilities

Writing a will - A fundamental part of Inheritance Tax planning is to make or review a will, for example to ensure nil rate bands are properly utilised and that more complex trusts are correctly set up. Making a will is essential if you want to ensure your money goes where you intend it to after you die. It is also a good way to ensure that your family do not pay more inheritance tax than they need to.

Life policy payouts - most are free of income tax. When you die, the proceeds of your life insurance policy are paid to your beneficiaries, and may be subject to inheritance tax (IHT). This could result in a tax charge of 40% of your estate. There are a whole host of ways in which we as an IFA can help you minimise the amount of IHT your heirs will face. For example, it may be possible to arrange your life insurance in such a way that the proceeds remain outside your estate, and can be used to meet the IHT liability arising from other assets.

Tax advantages of Investment Bonds - you can draw a regular income. Within certain limits this income is free of immediate tax and if you are a basic rate payer, may remain free of all tax. If you are a higher rate taxpayer, you need to take our advice on this type of investment, as there are particularly problems you will face (but can be avoided).

Personal pensions - Pensions are a particularly good product for tax-conscious investors, because they boost the value of every £1 you invest. Pension contributions give you tax relief at the highest rate you pay.
You and your employer are able to pay up to one annual allowance for that tax year. This amount is up to 100% of your relevant earnings each year. Even the non-earner can contribute (or you could contribute for them) up to £3,600 pa into a personal and stakeholder pensions. How about starting a pension for your child or grandchild?

Self Invested Personal Pension (SIPP) - where you can manage your own investments. Can be used by anyone but particularly useful for those who run their own business as a Sole Trader, Partnership, or Limited.

Savings - If you already have money in a PEP or TESSA Only ISA, there is no need to close that account before you buy an ISA.

Individual Savings Accounts (ISAs) - Every UK resident adult should consider taking out a tax-efficient Individual Savings Account (ISA). This investment allows you to save up to the limit per year without having to pay tax on either the income the investment generates or its capital growth.

Bonds - Government bonds - known as "gilts" - and bonds issued by individual companies work in the same way. Both corporate bonds and gilts can be wrapped inside an ISA to save tax. Investments like these are available as part of your equity ISA allocation for the year.

Capital Gains Tax (CGT) - gains on your investments - you can make gains up to the annual allowance above which you are charged at up to 40% some reliefs e.g. taper relief are available and you should consult us when you decide to cash in your investments. The taper reduces the amount of the chargeable gain according to how long the asset has been held.

There are products available, which offer capital gains tax breaks we can discuss these options with you if they are appropriate.

• 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.
• An ISAs nicer - Individual savings accounts are great for tax breaks if you are saving or investing.
• Use your other half - A higher rate taxpayer can save tax by transferring money into a lower earning - or non-earning - spouse´s name.
• Make a will - It is the only way to be sure your loved ones do not miss out on their inheritance, and to limit the tax paid on your estate.
• Check your code - Make sure you have the right tax code or you could be paying over the odds.
• Rent a room - Many people raise extra income tax-free by renting out a room in their home.
• Do not be 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.
• Company car? - Fill in a form to declare it as a taxable benefit. Broadly speaking, the smaller the vehicle, the less tax you will pay.
• Made a gain? - Make sure you take full advantage of your annual capital gains tax exemption limit.
• 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.