We’ve put together some ideas to help save tax before the current tax year runs out, plus some points for consideration to help you reduce your future tax bills. Of course, tax should be considered alongside commercial and practical decisions and not be the driving force in any major decision.
- The new ISA limits increased during 2014/15 and currently £15,000 (any mix of cash and shares) can be invested in a qualifying ISA, tax free. Junior ISAs enable parents or grandparents to save up to £4,000 a year tax free for their children or grandchildren. If you have some spare cash and fancy a tax-free nest egg for your children or yourself, consider this option.
- Income just over £100,000 pa? Some of this is taxed at an effective rate of 60% due to the claw back of the Personal Allowance – consider tax reducers such as salary sacrifice, pension top- ups, and gift aid donations. Review the ownership of income producing assets between spouses. These tools can also be useful when looking at income thresholds for child benefit.
- Considering selling any assets which might trigger a capital gain? Take advice to ensure you get the timing right and make the most of the £11,000 CGT Annual Exemption.
- Got a spare room? The rent a room scheme lets you earn up to a threshold of £4,250 per year tax-free from letting out furnished accommodation in your home.
- Considering taking advantage of the new flexible pension rules? If you’re aged 55 or over and you’re already considering taking your retirement savings via an income drawdown plan, then it might be worth considering your options now. New pension rules will come into force on the 6 April 2015, which will affect how retirement savings can be taken and your individual circumstances will determine which is the most suitable option for you. Please click here for further information.
Pension Changes – putting you in control
Your retirement years are meant to be happy years, so it’s important you think about how you want to spend them. At some point, you’ll need to make a decision that could impact on what you do and how you enjoy your later years.
The Government announced plans during the 2014 Budget to allow more flexibility when deciding how you can take your retirement savings.
From April 2015:
- regardless how big or small your retirement savings are, if you’re aged 55 or over, the decision on how you take your retirement savings will be up to you, although they will be taxable, and
- just like the current rules, you’ll be able to take 25% of your pension pot tax-free.
However, what do you do now?
Before retirement we suggest you:
Review your pensions to ensure that they are best positioned to achieve your retirement objectives. We can put you in touch with pensions specialists who can discuss your requirements and all the options with you.
At retirement, we suggest you :
Plan your income and reduce the tax that you pay. Using various tax wrappers and tax allowances can increase your income and reduce the amount of tax you pay.