Tax planning

Regents Court Financial is able to advise you on how you can best minimise your liability to tax - legally.

Income tax

Everyone can reduce the impact of tax by investing in personal pensions, because even non-taxpayers can put £2,808 into a pension scheme each year and have this “grossed up” to an investment value of £3,600, by the taxman adding a further £792 to the pot on their behalf.

Those with earnings can contribute as much as they earn to a pension scheme (subject to cap which is expected to fluctuate from time to time).

The money invested in pensions is not subject to UK income or capital gains taxes, although it is no longer possible to recover the 10% tax deducted from dividends from UK companies.

What is more, when the time comes to take benefits, it is currently possible to take as much as 25% of the fund as tax-free cash – even if you do not wish to draw a taxable income from the fund at the same time. You cannot, however, take your pension benefits until you are aged 55.

It is also possible to protect your savings from tax through Individual Savings Accounts (ISAs), which are now a permanent feature of the investment landscape. Currently, all those who qualify to have an ISA will be able to invest up to £10,680 in any one tax year, either all into an Equity ISA, or up to £5,340 each into Equity and Cash ISAs.

Capital gains tax

Each year, you can realise substantial capital gains without being liable to tax. The level usually rises each tax year. Both husband and wife can use their allowances (as can civil partners). There are other investments that allow capital gains tax to be deferred, and we can advise on these separately.

Inheritance tax

There are ways of managing your estate in order to minimise the impact of inheritance tax. In particular, the simple allocation of assets between husband and wife while still alive can ensure that the full inheritance tax threshold is used up on the “first” death. By doing so, it would be possible to reduce the tax potentially liable on a £400,000 estate from £46,000 to nothing.

Other ways of minimising the potential inheritance tax liability are by transferring money to family and friends by using exempt transfers, which include:

• Up to £3,000 a year, per donor;
• Small gifts of up to £250 per recipient;
• Gifts on consideration of marriage (or civil partnership) from £1,000 to £5,000 depending on relationship to the couple;
• Gifts from normal income expenditure.

In addition there are potentially exempt transfers (PETs). These are gifts made between three and seven years prior to death, where the tax can be reduced by as much as 80% and gifts made more than seven years before death, which are totally free of tax.

We can help you to plan your financial affairs in order to minimise the impact of tax.

The value of investments in not guaranteed and will fluctuate. You may receive back less than you put in. The basis and levels of taxes and reliefs is subject to change. The financial services authority does not regulate taxation advice.

We do not make a charge for an initial consultation.