The objective of tax planning is to minimise tax liabilities by making the best use of all available allowances, deductions, reliefs, exclusions, and exemptions and commonly covers the following areas:
The objective of tax planning is to minimise tax liabilities by making the best use of all available allowances, deductions, reliefs, exclusions, and exemptions and commonly covers the following areas:
Income tax
Even though your income may be taxed through PAYE, it doesn’t mean that there aren’t opportunities for you to reduce your tax bill.
You may be able to claim a tax deduction for the following:
Claims can be backdated for up to 4 years, so a claim for tax relief can be very worthwhile.
Capital Gains Tax
Capital gains tax (CGT) is the tax payable on the profit you make when you sell or dispose of a taxable asset.
The annual CGT exemption and the CGT rates change regularly, so you need to plan before you sell an asset to establish if there are tax savings to be made. It is too late once the sale has taken place.
Opportunities arise if you are married or in a civil partnership as assets can be transferred between you free of CGT. You can stagger disposals of assets either side of a tax year to maximise the annual exemption you can claim. You also need to check if you or your spouse have losses so that these are used effectively and not wasted.
Consideration should always be given to the following:
The Tax Angel can advise on the following:
Inheritance tax
The Tax Angel offers comprehensive and bespoke inheritance tax planning advice. There is a balance, making sure that you maintain your current standard of living, whilst at the time preserving as much of your wealth as possible to pass onto your loved ones.
I can review your estate, calculate your anticipated IHT liability and look at ways this can be reduced. Timely tax planning can significantly reduce or even eliminate any IHT.
The Tax Angel can advise on the following:
Whether you are leaving the UK to take up employment abroad or retiring overseas, or even coming to the UK to work, The Tax Angel can help.
The tax rules regarding residency and domicile are complex, it is therefore advisable to seek professional help.
You may own and rent a property overseas or are in receipt of a foreign pension. Everyone’s tax position is unique and so you need advice which is tailored to your circumstances.
The UK has tax treaties with over 100 countries with the aim of eliminating double taxation on income or gains arising in one country and being paid to a resident of another country. These tax treaties can be tricky to understand and professional help is recommended to ensure that your income is not taxed twice.
The Tax Angel can advise on the following:
Inheritance tax rules on UK and overseas assets
You may think that it’s too late to consider tax planning when someone has died, but this is not necessarily the case.
Sometimes a Will isn’t written in the most tax advantageous way and there can be unintended tax consequences, depending on how a deceased’s assets are left.
You can however make changes to a deceased’s Will by using a Deed of Variation. This is an agreement of changes to the deceased’s Will which a beneficiary wishes to make. Any changes are treated as having been made by the deceased and do not affect the tax position of the person giving up their entitlement.
A Deed of Variation is a very useful tax planning tool and allows some flexibility following someone’s death to mitigate or even extinguish any unintended tax liabilities.
When selling assets such as a property or shares out of an estate, there may be tax planning options available to mitigate the capital gains tax payable by the executors.
The executors are entitled to claim an annual capital gains tax exemption for the tax year of death and the following two tax years.
It may, however, be possible for the executors to appropriate an asset, or a part of an asset to a beneficiary to make use of the beneficiary’s annual capital gains tax exemption. This may also enable a beneficiary to utilise any personal capital losses they may have, or benefit from a lower rate of tax.
The Tax Angel can review any planned disposals and advise you if there are any options to mitigate any tax potential tax liabilities, thereby ensuring that as much of the inheritance tax as possible is reserved for the intended beneficiaries.
Tax planning is equally as important for trust as it is for individuals. You need to consider the tax implications of potentially distributing monies to beneficiaries if the trustee has discretion over this.
Distributions from a discretionary trust currently carry a 45% tax credit and non-taxpaying beneficiaries, usually minors, can reclaim this tax from HMRC.
Take for example a minor beneficiary with no other income who receives a net payment from a discretionary trust of £5,500. They would be able to reclaim £4,500 from HMRC.
It is therefore important to consider the timing of payments from the trust to maximise the beneficiary’s tax-free personal allowance.
Just like individual taxpayers, trustees have an annual CGT allowance, which is half of the standard CGT allowance.
One way of utilising the annual allowance is for trustees to sell stocks and shares thereby realising a gain within the annual allowance and then repurchasing the shares. The repurchase has to be delayed by more than 30 days to take advantage of these rules. The outcome is that the base cost of shares will be increased, thereby reducing the eventual capital gain when the shares are sold.
A holdover claim can be considered when assets are settled into trust so that the gain is not charged on the settlor but is deferred until the asset is sold by either the trustees or the beneficiaries. When assets are transferred out of a trust to a beneficiary, it may also be possible for the trustees and the beneficiary to complete a holdover claim. This will again defer any gain inherent in the asset until it is eventually sold.
Many trusts are liable to a 10-year anniversary charge under the inheritance regime. Knowing when the next 10-year anniversary falls means that tax planning can be carried out in advance. This may result in making capital distributions to beneficiaries prior to the anniversary with reduced tax charges. It may also include ensuring that the trust has sufficient liquid assets to cover any 10-year anniversary charge due without incurring unnecessary tax charges.
Your client may have come to you for advice on selling a property, setting up a trust, giving away assets or saving tax when administering an estate. You need to be confident that your tax knowledge is accurate and relevant. It is increasingly difficult to keep up to date with all the numerous tax changes. Out of date knowledge and not fully understanding the tax rules can result in costly errors and a breakdown in the relationship between you and your client.
Whether you are looking for complete tax advice, or a second opinion, The Tax Angel can help with:
With over 30 years’ personal tax experience working across the North West and North East of England, in both accountancy and law firms, I am well placed to deal with all your personal tax requirements.
PAYE income, expenses, tax codes, overseas issues.
All aspects of tax return preparation.
Rental accounts, HMRC disclosures, 60-Day CGT returns, SDLT.
Mitigation, sale of assets, overseas matters, trusts, and estates.
Planning, gifts, exemptions, tax returns, estate registration.
Income tax and inheritance tax returns, trust registration, tax advice & planning.
Income tax, CGT, IHT mitigation, all aspects of trusts, and estates.
Disclosures, Let Property Campaign, Tax Investigations.