Minimising your tax liability

Nobody wants to pay more tax than they need to, but the government seems to be finding more and more ways to take our money by stealth, so it is important for each of us to consider how we can at least minimise the impact.

Taxes fall into a number of areas:

  • Tax on spending – not much can normally be done about VAT and other excise duties;
  • Tax on income – from what we earn through work and from our investments – it is often possible to minimise this by making use of allowances (for example, for pension contributions) and special investment opportunities (such as ISAs and other tax efficient investments);
  • Tax on capital gains – now levied at 18% for standard rate taxpayers and 28% for higher and additional rate taxpayers, except many entrepreneurs, who can realise gains of up to £10 million throughout their lifetime, on which they only pay 10%;
  • Tax on inheritance – is levied at 40% on everything above a threshold which stands at £325,000 for an individual in 2015/16 (husbands and wives and civil partners can ‘transfer’ unused relief between them, on death).

Inheritance Tax:

You could become a 40% tax payer for the first time when you die
On an estate of £1,000,000 the inheritance tax could be anything from £140,000 to £270,000 (to take account of current £325,000 individual IHT nil-rate band). So the tax man could under certain circumstances take more out of your estate than each of three children.

It pays to take professional advice.

We have considerable experience in helping families to minimise the threat of this ‘tax on family savings’.

For more details, please contact us.