Are you perplexed by the thought of personal tax planning? Don’t worry – you’re not alone.
Reducing our tax bill is not something we’re taught about in school, so when it gets round to tax filing season, a huge number of us are left out in the dark.
Sadly, this means we often pay much more tax than we should be paying. So, what can be done? Personal tax planning is a topic our tax experts spend a lot of time thinking about, so we’ve asked them to come up with five quick tips which will help you save money – starting from today!
1. Pensions, pensions, pensions
Individuals can contribute to their pension pots tax-free, providing they don’t go over the £40,000 annual limit. They can also contribute a further £2,880 towards a pension for a non-earning spouse or child, saving them even more in tax. This not only helps future-proof you and your family’s retirement income, but also helps keep you out of the higher or additional rate tax bands.
Have you opened an Individual Savings Account (ISA) for you and your family? The allowance for 2019/20 is £20,000 per person, meaning you can start generating interest tax-free from today.
3. Fight back against Inheritance Tax
Individuals can gift up to £3,000 of gifts each year to family and friends without incurring Inheritance Tax. Remember, this allowance can be rolled over by up to one year.
4. Beware employee benefits
Most employee benefits – such as company cars – are now taxable as regular income. If you don’t actually need a company car, substituting it for cash and contributing it towards your pension, for example, may be a more tax-efficient option.
5. Marriage has its benefits
All married couples in the UK are entitled to the Marriage Allowance, but very few are even aware it exists. The allowance allows you to transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, providing they earn more than you and are within the basic rate tax band. To benefit, the partner transferring their allowance must normally have an income below the Personal Allowance – currently £12,500.
This can result in annual tax savings of up to £250 a year.
Get more advice today
We provide a comprehensive personal tax planning service which is specifically tailored to the needs of individual clients. Our focus is to minimise our clients’ tax exposure whilst ensuring all compliance requirements are met.
For more advice please contact us today.