End of Year Tax Tips 2014-15 Courier February 2015
JAN 27, 2015
Tax Efficient Planning for Tax Year 2014-15
The new tax year has now begun and it would be wise to look at you own financial situation to ensure you are making use of all the tax allowances available to you, This is just scratching the surface as we do not have enough room to include all tax saving tips.
Q - Do I have to pay tax on interest earned in the bank.
A – Yes, you will pay tax on all interest earned except for a non taxpayer.
Q - Is there Anything I can do about my mortgage.
A - Check out your mortgage rate with an Independant Mortgage Broker, are you on the best rate suitable for you, should you be on a fixed rate, a tracker rate or the standard variable rate. Interest rates are at an all time low therefore a Standard Variable Rate may well work out the most efficient at this time.
Q – What can I do about Inheritance Tax.
A – Annual exemption rules allow each person to gift up to £3,000 per year and the exemption can be carried forward 1 year. Marriage exemption rules, allows gifts of up to £5,000 to each of your children (including step-children and adopted children). The current Nil Rate Band is £325000 is frozen until 6 April 2015. This is a burden which can in many cases be eliminated or at least be reduced.
Q - Is there any way a tax payer can eliminate paying tax on deposit or investments.
A - Put your cash in a tax efficient wrapper such as an ISA. From 1 July 2014you can invest £15000 into a stocks and shares ISA or a Cash ISA.
Q – Can I transfer my CASH ISA to Stocks and Shares
A - You can now transfer cash ISA,s into stocks and Shares if this is suitable and dependant on your attitude to risk. You can now also transfer Stocks and Shares to Cash.
Q – Can I make a Pension contribution
A - A payment to your pension in this tax year will give tax relief against your earnings in the current year, paying contributions can give you tax relief of up to 40%. You can pay up to 100% of your earnings as a contribution into a pension plan with a limit for tax relief of £40000.
Q - I am losing some of my Child benefit what can I do.
A – If the highest earner is earning between £50000 and £60000 then the tax applicable will be 1% for every £100 over £50000. And over £60000 and you will lose all child benefit. You can avoid this by merely making a pension contribution, speak to an adviser.
Q – Is there anything else I can do
A - Take advantage of all tax exemptions. Everyone has an annual Capital Gains exemption which for the current year it is £11000. Gifts between spouses are tax free so consider transferring assets to your spouse to reduce any gains.
There are other tax efficient investments such as Venture Capital Trusts and Enterprise Investment Schemes which allow you to claim back Income tax you have paid or will pay. These are specialist investments and require specialist advice.
As always speak to an Independent Financial Adviser.
Any reference to spouse also means civil partner.