‘Advanced Tax planning can prove a complex area of personal finance and there are many factors that require consideration. Our tax specialists are professionally qualified and offer many years of experience and knowledge, ensuring that you will be advised with a full understanding of the marketplace and latest taxation and legislative developments’
In the UK, the tax we pay helps to fund the things we will all rely on at some point, like schools, the NHS and public services. Whilst it is important we all contribute towards taxes, it is a good idea to understand what you should be paying as you do not want to pay more than your fair share. Taxation can be a complicated area of personal finance and the regulation and reliefs can often change, so it can be easy to miss out on opportunities
When you die, the Government will assess how much your overall estate is worth. Your estate may include funds that you hold on cash deposit, investments, property, any businesses you may own, vehicles and in some cases payments made from life policies.
Any debts you have accrued will then be deducted to give a total value of your estate. If this value exceeds the IHT threshold, set at £325,000 for 2020/21, your estate will pay tax at 40% on the excess on death.
In the UK, income tax is paid on most forms of income earned by an individual in a tax year. It is paid by employees and the self-employed and may also be payable if you aren’t working, for example income from a pension or savings, providing this income exceeds the personal allowance band.
There is no minimum age at which a person becomes liable to pay income tax. What matters is the amount of taxable income earned and should this income be below £12,500 for 2020/21 then no tax is payable.
Capital Gains Tax
Once you sell or dispose of an owned item you could be liable for capital gains tax. Investment property, shares and other specific personal possessions may trigger a gain and CGT is only charged on any profits (gain) that you make from sale of an asset, not on the sum of money you receive as a whole.
Each individual has an annual allowance for gains made on these assets and this is set at £12,300 for 2020/21. Any gain made in excess of this will be taxed based on your income tax band at that time.
Estate Planning / Trusts
Often overlooked, Estate planning via trusts can prove an incredibly useful device that individuals may employ for many purposes.
Although many deem trusts to be used only by the ‘super rich’, their use is widespread as they can offer wider flexibility than outright gifts. In their simplest form, a trust is just a legal mechanism for separating the ownership of an asset into two parts; the ‘legal’ ownership, or title to the asset, and the ‘beneficial’ ownership.