Tax Planning
Introduction to Tax Planning
Tax planning is an integral part of maintaining a healthy financial well-being. We offer tax planning for those wishing to build and preserve wealth while minimising their tax liabilities. Tax planning is more than just making sure you comply with tax laws, it is a proactive approach, reviewing your tax affairs and minimising your tax liabilities in the most efficient way for your specific circumstances. After all, the tax laws are there in part so that you can take advantage of the tax-saving incentives.
Why Tax Planning is Crucial
Proper tax planning upfront can save you a financial and administrative headache down the line. Planning allows you to preserve your cash by reducing your tax liabilities as much as possible, within the rules set out by law. With our expert tax planning, you can build your wealth by reinvesting tax-savings into your business or portfolio of assets. Or perhaps you wish to pass more wealth onto your family, or follow more of your personal pursuits / hobbies – either way, tax planning can be a key component of accelerating your progress towards your objectives.
Who Can We Help With Tax Planning
- Business Owners / Sole Traders / Property Owners: Finding Tax-Saving Opportunities That May Be Less Obvious
- High Net-Worth Clients and Investors: Paying Tax on A Portfolio of Assets
- Families and Estates: Inheritance Tax and Succession Planning
Our Tax Planning Services
- The Big Review: A look at where you are today, your tax situation, and where you want to be.
- Strategic Advice: Recommending how to align your financial and life goals with tax strategies.
- Implementation Support: Helping you implement the strategies that will help you to achieve your financial and life goals.
- Periodic Reviews: Proactive reviews to monitor changes to tax laws and your objectives so that you can adapt your strategies as necessary.
Key Problems
- Tax Planning: Several factors make structuring and implementing a successful tax plan challenging.
- Complex Tax Laws: Understanding and keeping pace with the changing tax laws is tricky and should be left to experts.
- Finding the Time: The last thing that people tend to do when we are all so busy is more work, and finding time within your day to learn about tax-saving opportunities probably isn’t high on your list of priorities!
The Role We Play in Overcoming These Challenges
- Expertise In The Field: We have dedicated years to learning the UK tax regime and review the ever-changing tax laws.
- Time Saving: We pay attention to the tax so that you can work on the things that require your attention.
- Holistic Solutions: We offer personalised solutions that work together with your specific needs to suit you and your financial goals.
FAQ: Tax Planning in the UK
What is Tax Planning? Tax planning consists of looking at your financial position and other objectives and taking measures to effectively pay as little taxes as possible. It is a method of reducing tax bills through legal means and involves compliance with all legislation accordingly. Tax evasion is illegal, tax planning is using the incentives allowed by the government.
Some of the main taxes in the UK are:
- Income Tax
- Capital Gains Tax (CGT)
- National Insurance Contributions (NICs)
- Corporation Tax
- Value Added Tax (VAT)
- Inheritance Tax (IHT)
- Stamp Duty Land Tax (SDLT)
But there are others, such as Insurance Premium Tax for example.
There are several ways through which you can lower your Income Tax liability like:
- Using your and your spouse’s personal allowances and tax-free bands
- Contributing to pensions or making Gift Aid charitable donations
- Claiming all available deductions from your income if you are self-employed or employed
- Tax-efficient investments such as ISAs, EIS, SEIS, SITR, VCT investments
- Using corporate structures
A Personal Allowance is the amount of income you can earn each year without paying Income Tax. A standard Personal Allowance for the tax year 2024/25 is £12,570.
Your employer or pension provider uses a tax code to work out how much Income Tax to deduct from your pay or pension. It tells you what portion of your income is not liable for tax and if there are any tax reliefs or liabilities being deducted from your PAYE source income. Your tax codes are issued by HMRC but you can contact them to change these – HMRC have been seen on many occasions to get tax codes wrong so it is useful to keep an eye on them.
Capital Gains Tax is the name given to a tax on the profit (or gain) when you sell or dispose of an asset chargeable to CGT. The gain is taxed at either 10%/18%/20%/24%/28% depending on your circumstances and the asset. Some assets or transactions are exempt from CGT.
If you give an asset away for free then you can still be liable to CGT. To reduce CGT, you can:
- Use your full annual CGT allowance (£3,000 for tax year 2024/25)
- Pass certain assets to your spouse or civil partner prior to disposal
- Use your losses and allowable deductions (such as purchasing and selling expenses as well as costs of enhancing the asset) to reduce the taxable gain
- Make tax-efficient investments such as EIS or SEIS shares, which have favourable CGT incentives
If the value of the estate when someone dies is more than the Nil Rate Band (NRB) (£325,000 for the 2024/25 tax year, plus potentially the Residence Nil Rate Band of £175,000 for 2024/25), Inheritance Tax at 40% will be imposed on the value of the estate. Measures to help prevent this from occurring are as follows:
- Utilising the NRB and residence NRB
- Making eligible gifts out of the estate during your lifetime (and surviving for certain time-periods or using exemptions) to reduce the total value of your estate
- Hold assets that qualify for reliefs such as Business Property Relief and Agricultural Property Relief
- Structuring certain investment assets throughout a corporate structure to obtain 100% Business Property Relief, when it would not otherwise be allowed without the structure
If you’re a UK taxpayer, you can get tax relief on pension contributions. Relief is usually given at your top rate of Income Tax of 20%/40%/45%. Basic rate relief (20%) is automatically added to personal pensions, with higher and additional rate taxpayers claiming further relief through their tax return. If you are an employee with a work based pension scheme then you will usually get full tax relief at source and don’t need to do anything else.
ISAs (Individual Savings Accounts) are savings and investment accounts outside the remit of UK Income Tax and Capital Gains Tax (CGT). Provided you do not save more than your ISA allowance (currently £20,000 per year) then you do not have to pay Income Tax on your income or gains in your ISA account, even if the value appreciates to above your ISA allowance. If you exceed your ISA allowance you will be charged Income Tax or CGT if you make income or gains.
To find a good tax adviser:
- Consult with experts (Chartered Tax Advisers, Chartered Accountants)
- Make sure they are members of expert professional bodies (i.e CIOT, ICAEW)
- Look at recommendations and reviews
- Make sure they specialise in the specific area of tax that you need help with