30 June 2014 10:00
News
As New ISA (NISA) day approaches, don’t forget the rest of the tax ‘jigsaw puzzle’, says Brewin Dolphin
Savers who are anticipating the launch of the NISA on July 1st shouldn’t forget the other options available to them to save tax, says leading wealth manager Brewin Dolphin.
“It’s possible to shelter many more of your assets from the taxman than most realise, as long as you remember to put together all the pieces of the tax jigsaw puzzle,” says Brian James, Divisional Director and Brewin Dolphins' Head of Financial Planning Plymouth Office.
“While the increased flexibility and rise in
ISA limits is welcome, it is also important that savers consider other forms of
tax planning.”
Here are some tips to complete the jigsaw puzzle:
1. Use your NISA Allowances
As well as the extra £5940 you can now
put in this year’s Isa, you can also add to your child’s JISA (Junior ISA) or
CTF (Child Trust Fund). The limit for these rises to £4000 on July 1st,
so make sure you use all you can. “Income and capital gains from ISAs are tax
free, so consider using the allowance for your risk based investments rather
than your cash,” suggests Mr James.
2. Make
a pension contribution
The
pension Lifetime Allowance (LTA) reduced to £1.25m on 6th April this
year. You need to ensure that you won’t exceed that or you will be hit with a
hefty tax charge. Ignoring this, you’ve got £40,000 gross that you can put into
your pension. You should check this year and contribute your maximum if your UK
relevant earnings allow it. If you have neglected your pension in previous
years you might also be able to add up to £50k a year for the last three years
and get tax relief on that as well.
You
can also make a Stakeholder contribution of up to £3600 gross for your children
or non-working spouse and receive 20% tax relief on their pension.
For
parents: if making a further pension payment brings your individual taxable
income(s) below £50,000, you may be able to reclaim or retain child benefit.
3. Transfer
your assets
Consider
transferring income producing assets to your spouse or civil partner. If one of
you is a lower-rate taxpayer than the other, work out the income from the asset
per £1 and transfer enough to use up the lower tax band. The same applies for
Capital Gains Tax, which is charged at 28% for high rate taxpayers and 18% for
basic rate. Transfer assets with gains to the lower rate taxpayer and use up
both of your allowances. Also remember to use your annual exemption allowances
for Inheritance Tax.
4. Invest
into an EIS or VCT
For those with a higher risk appetite,
an Enterprise Investment Scheme (EIS) or Venture Capital Trust (VCT) can offer
some great tax incentives.
News item by Brewin Dolphin Limited, one of the UK’s largest
independently-owned private client wealth managers.
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