Planning for a Year’s Prosperity

Planning for a Year’s Prosperity

Planning for a Year’s Prosperity

ITP, as a tax advisory firm, can help clients in the London area on a variety of tax and financial planning issues, ensuring that they get the most out of their wealth.
Income tax
Use Your Personal Tax Reliefs (unless you are non-domiciled)

  • Normally, capital and related income can be transferred between husband and wife or civil partners without incurring any tax consequences, unless one of the spouses is non dom. These transactions must be made as straightforward gifts and are exempt from both capital gains and inheritance taxes. 
  • Consider providing a wage to your spouse, civil partner, or children for working in your company. 
  • Consider forming a partnership with your spouse or civil partner, if you are a freelancer earning above £50,000 per annum. 
  • Consider making one-time or ongoing charitable contributions, if you are earning over £50,000 per annum. 

Pensions 

  • Check sure your retirement plans are suitable, especially if you are self-employed or do not participate in a workplace pension plan. 
  • The amount that can be put into a registered pension scheme has no limits. However, the number of tax-deductible contributions that can be made is limited. The greater of an individual’s UK relevant earnings or £3,600 is the maximum amount on which an individual can claim tax relief in any tax year, subject to the appropriate annual allowance (contributions in excess of the annual allowance are likely to give rise to a tax charge). 
  • Employees in a business pension plan may make additional voluntary contributions to improve their final pay-out, or they may contribute to any other registered pension plan. 

 

Capital Gains Tax (CGT) 

  • You are entitled to £12,300 in tax-free net gains in 2022/23. Plan your disposals so that you can take advantage of this exemption. 
  • Consider postponing disposals until after April the 5th to obtain another annual exemption £12,300 (it is important to note that from 27 October 2021 CGT on UK residential properties will be due within 60 days) 
  • Consider timing your sales to take advantage of any otherwise unused basic rate income tax band, resulting in a lower tax rate of 10%. 
  • Consider making or changing an election to decide which of your homes will qualify for the CGT exemption if you own more than one. 
  • Make a claim for assets that lost their value if you have paid an inheritance tax on those assets.  
  • Consider taking advantage of EIS deferral relief, which allows you to defer gains on the sale of any chargeable asset by investing in new ordinary shares in a qualifying unquoted trading firm. 

 

Inheritance Tax (IHT) 

  • Examine your strategy for estate planning. 
  • Examine your Will. 
  • Consider making a one-time contribution to a person or a trust  
  • Invest some of your assets into agricultural property to get Inheritance Tax Relief. 
  • Some life insurance policies can cover the Inheritance tax bill. 
  •  You can give away a total of £3,000 worth of gifts each tax year without them being added to the value of your estate. This is known as your ‘annual exemption’. You can give gifts or money up to £3,000 to one person, give £250 to as many people as you wish and £5000 as wedding presents. You can carry any unused annual exemption forward to the next tax year – but only for one tax year.