Use your tax breaks

In the view popularly attributed to Benjamin Franklin, nothing is certain except death and taxes. However, using the tax allowances granted by the Government can help to mitigate your tax liability.

To begin with, you have a personal income tax allowance, an annual exemption from capital gains tax, plus numerous tax credits dependent on your circumstances. Schemes like Gift Aid offer tax relief on charitable donations and there is also an Inheritance Tax (IHT) threshold below which nothing is due. Alongside, there are tax-efficient investment products such as Individual Savings Accounts (ISAs) and pensions that provide relief from income and capital gains tax (CGT) to differing extents. Moreover, some individual assets are specifically exempt from CGT: for example, your main home, your car, and UK Government bonds (gilts).

In terms of IHT, the threshold is £325,000 (£650,000 for married couples and civil partners) for the 2017/18 tax year with an additional main residence nil-rate band of £100,000 per person. The value of your estate above this is liable to tax. This can force beneficiaries to sell family heirlooms to pay the tax bill. However, there are exemptions available from this tax as well, and a little planning can help you to access the range of annual exemptions and allowances in advance, allowing you to reduce the liability as far as is practical – or provide the means by which your beneficiaries can pay it without having to sell items of sentimental value.

We are always available to discuss any queries or concerns, so just call or drop us an e-mail.

The value of your investment can go down as well as up and you may not get back as much as you originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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