Tax Planning - we can help
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, over four in every five 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 £9.3 billion each year by not taking any 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 £294 per taxpayer in unnecessary payments and missed opportunities. So if we are prepared to squander this much through our own lack of planning – and high rate taxpayers will waste even more – 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.
But, tax doesn’t have to be taxing!
Here are 10 basic ways to claw back some of the waste:
If you are single and have assets over £325,000 or are married/civil partners with assets over £650,000;
Plan your inheritance - an extra £1.9 billion could go to chosen heirs by planning properly to avoid IHT liabilities. IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.
- If you save;
Use up your annual NISA allowance - £263 million in tax could be avoided by sheltering investments in NISAs, or moving savings from an ordinary deposit or savings account to a NISA. Also consider a Friendly Society savings account or products from National Savings & Investments as tax-efficient savings options.
Top up your pension pot - £726 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.
- If you are eligible;
Claim your tax credits - £3.7 billion of ‘free money’ is up for grabs from HMRC and the DWP, in the form of Pension Credits, and Tax credits.
- If you fill in a Tax Return;
Sort out your self-assessment - £460 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of £100; further penalties and errors make up the balance of tax wasted in this way.
- All taxpayers;
Maximise your personal tax allowances - £474 million goes begging each year, £330 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £144 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.
- If your employer offers an Employee Share Plan;
Take advantage of it - £184 million is up for grabs for the estimated 600,000 staff currently in Profit Related Pay schemes.
- If you have Capital Gains;
Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your CGT allowances - £264 million could be saved in this way.
- If you give to charity;
£936 million more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.
- If your child or grandchild is eligible for a Child Trust Fund;
Avoid waste by using up the tax free saving potential - £242 million in tax could be saved in their first year of existence.
To discuss any of this matters further, please contact us on 01273 765960 or firstname.lastname@example.org