Things are certain to start hotting up this year as the government looks to clamp down on tax loopholes. There are of course some ways in which tax can be reduced, the following in our opinion are likely to remain untouched by the new clampdown. So let’s look first at the basis’s which apply to nearly everyone.
Start by taking a look at your deposit accounts, any monies in current accounts and ordinary savings accounts should be transferred into cash ISAs which will ensure that the little interest earned will not suffer tax, most cash ISAs can still allow instant access with only a £1 needed to keep the account open.
If you have used up your ISA allowance and still have funds on deposit and if a couple where perhaps different rates of income tax are applicable then look at moving any deposits into the name of the lower rate tax payer, I know it sounds simple but I see this time and time again where all the deposits are sitting in a higher rate tax payers account, instead of in the spouses or partner name as they are non tax payers or basic rate. The same position can be seen with equities and unit trusts.
There are two points here, one is Capital Gains Tax and the other being income tax on any dividends. It makes sense to make sure holdings are split to take advantage of both CGT allowances as both parties have an allowance of £10,100 to set against gains. If the higher rate tax payer has all the dividends they will be taxed at the higher rate so again look at the position.
Pensions can still be useful tools especially if someone is just into the higher rate of tax, as a contribution into a pension plan has the effect of extending the basic rate band by the amount of gross contribution paid. This could then remove the higher rate tax and save the 40% tax. These are but a few of the tips and help your financial planner at Wades can provide so its worth just making an appointment to go through things.