Proper planning can help you to build a secure financial future for you and your family. Here are some strategies to consider as part of your personal financial plan.
Make full use of your allowances
If your spouse or partner has little or no income, you might want to consider transferring income (or income-producing assets) to them to ensure that they are able to make full use of their personal allowance. However, please speak to us before taking action as you need to take into account the settlements legislation governing ‘income shifting’.
Married couples and civil partners paying only basic rate income tax may also be able to transfer 10% of their personal allowance via the Transferable Tax Allowance.
Preserving your entitlement to Child Benefit
The High Income Child Benefit Charge increases by 1% for every £100 of adjusted net income over £50,000, up to the full amount at £60,000.
However, it may be possible to reduce the charge by increasing pension contributions or utilising tax-saving salary sacrifice schemes. The rules for salary sacrifice are changing from April 2017 so less schemes will qualify for relief. Taking action before April could secure relief during a transitional period.
Tax-efficient savings options
Despite relatively low interest rates, ISAs remain a viable option in saving for your children’s future. In 2016/17 up to £15,240 can be invested in any combination of cash or stocks and shares, and into your choice of ISA. Options include a Junior ISA (available to all UK residents under the age of 18), the Help to Buy ISA, and the Lifetime ISA as well as many others.
In addition, the new Personal Savings Allowance, which came into effect in April 2016, allows basic rate taxpayers tax-free savings income of up to £1,000 and higher rate taxpayers up to £500.
Making your will and planning how you will pass on inheritance to your family is an important subject. If your children are grown up and financially secure you might want to consider leaving your assets to your grandchildren to, in effect skip a generation of Inheritance Tax. Plan your will taking all structuring options into account, and review as often as is prudent.
Putting tax-efficient planning steps into place now could help to provide a brighter and more secure future for you and your family. Please contact us today for advice.