Personal tax planning

While most businesses routinely review the impact of tax on their activities as an essential part of their financial planning, it is less common to find individuals that do the same.

Yet a quick calculation of the total each of us pays in taxes in their various forms shows the extent of the hole made in our pockets by income tax, national insurance, value added tax, council tax and sometimes stamp duty, capital gains tax and (usually a one off!) inheritance tax as well.

So whether you take advantage of professional advice, or do it yourself with the aid of one of the published self-help guides, a once-a-year appraisal of the options you have to minimise your taxes will bring benefits.

The areas to consider vary radically according to your circumstances. Clearly someone employed by the UK civil service (a tax inspector, perhaps?) would have fewer options than an individual who owns a business, especially if it includes operations overseas.

Having said that, there are a number of basics that any annual appraisal would include and we list some of the most important areas below.

Anyone with straightforward personal finances can benefit from careful study of, for example, the Which Tax Saving Guide. But this can take up a lot of your time and books such as this can only provide a brief introduction to the subject. To be sure that your personal tax strategy is in line with your own financial and personal goals you may need more – and that’s when you should be speaking to us. So contact Bernice Constantine today!

But leaving aside the commercial, here is a brief list of topics to consider:

– tax returns: do you need one? If you do but have not received one you should ask; there are tax based penalties for failing to do so.

– tax returns: are they up-to-date? There are penalties waiting for those who miss the deadlines.

– has tax due been paid on time? If not, interest will be charged.

– have all tax allowances, reliefs and deductions been claimed or used in a way most beneficial to you?

– in the case of married couples or parties to a civil partnership (or in some circumstances if you have a probationery co-hab!) there are planning opportunities where you can transfer income from one person to the other to gain the most from allowances and lower tax rates.

– has best use been made of tax-efficient investments?

– what about pension planning? Despite the extra taxes imposed on schemes by Gordon Brown and maintained and enhanced by Alistair Darling, there are still significant tax advantages to using pension schemes;

– are there opportunities to save tax by deferring income or bringing ┬áit forward?

– if you receive taxable benefits in kind (such as for use of a company car) have these been reviewed to minimise tax costs?

– should you consider restructuring loans? You now receive no tax saving on a mortgage on your home but relief is sometimes available for borrowings to support a business, private company or to finance the cost of investment property.

– if you have a business (or a company) has a separate planning review been carried out for it?

– where capital gains tax is an issue, do you make the best use of the annual exemption and of losses?

– do you have an up-to-date will and has a recent inheritance tax audit been done?

– if you have a high-value business and are approaching retirement or considering selling, you must take advice as early as possible: major tax savings can still be made.

If you believe you have an opportunity or a problem, please give Bernice a call.

Riley Chartered Accountants
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