| Take a look at our brief summary of the key areas that you may wish to discuss with us.
Reducing tax pre–retirement
Reducing your tax bill requires careful financial planning in the context of your financial circumstances and objectives. We could assist you to make the optimum use of all the tools at your disposal, including taking advantage of your tax allowances and tax-efficient savings and investments.
How can I make my savings and investments tax–efficient?
- Maximise your pension contributions (subject to annual limits)
- Take advantage of your annual allowances
- Invest for growth, not income
- Consider tax–efficient investment vehicles
Before you embark on any plan of investment, it is vital that we assess your situation first, as some schemes carry a higher risk to the security of your capital than you may be prepared to accept.
Reducing tax at retirement
When you retire, saving tax often becomes a priority, as your income will usually be fixed. We can help you consider how you could restructure your assets and retirement income so as to keep tax to a minimum – both now and in the future. To do this you need to consider the following areas:
- Tax on your income (Income Tax)
- Tax on your capital (Capital Gains Tax)
- Tax on your assets on death (Inheritance Tax)
Tax on your income
Income from your pension
You will be taxed on your pension income irrespective of the type of pension you have. While your pension income is taxable, the tax-free lump sum could be invested tax-efficiently until it is required.
Income from other savings and investments
If your pension provides sufficient income to live on, then you may be paying tax unnecessarily on other income. We can help you restructure your savings and investments to maximise growth and minimise taxable income. You could then use any surplus income to fund inheritance planning.
Tax on your capital
Prior to retirement, the focus of your saving and investing is usually to build your capital. At retirement, you may need to shift this focus to supplement your pension income. A tax-efficient way to do this is to make use of your annual Capital Gains Tax (CGT) allowances. These can be made up to £8,500 on the disposal of assets and investments in the current tax year (2005/06) without you having to pay tax.
Everyone has their own annual exemption, so a couple could between them make up to £17,000 of gains before any capital gains tax becomes payable.
Tax on your inheritance
If you have not done so already, then this is the stage in your life to take inheritance planning seriously.
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Reducing tax after retirement
Most of your retirement income, including your pension and the interest and dividends earned on savings and investments, is subject to Income Tax.
We can ensure that you use your tax allowances to manage your taxable income.
However, we will also need to look ahead at how you could reduce the tax your dependants may have to pay when you die.
Managing your taxable income
Use your annual tax allowances
With careful use of your annual Income and Capital Gains Tax allowances you could:
Restructure your savings and investments to provide income.
Realise profits on existing investments to use as tax-efficient income.
Reduce surplus taxable income by refocusing your savings and investments to provide growth rather than income. Reduce inheritance tax
If you plan to transfer assets to your family or anyone else on your death, then now is the time to plan to ensure the transfer takes place tax efficiently. The first thing to do is make sure your Will is valid and up to date. Secondly, you should take account of the potential impact of Inheritance Tax (IHT). Have you considered the following?
Are you making the most of the tax allowances available to you?
Is all of your tax planning secure following any changes in the tax laws?
Do you know how to restructure your savings and investments to maximise growth and minimise taxable income?
Have you thought about the potential impact of your Inheritance Tax (IHT) bill? Tax planning is a complex and often fast-changing area. Time is running out if you haven’t prepared your finances before the 5 April 2006 ‘end of tax year’ deadline. To ensure that you have fully utilised all the options available to you, why not allow us to review your situation? Please e-mail or contact us for further information. It’s your call. Levels and bases of, and reliefs from, taxation are subject to change.
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