Year-End Tax Planning Tips

16th February 2021

It is good practice to regularly take stock of your financial affairs to ensure you are making the most of all tax allowances available to you. At Gilbert Stephens Financial Services we offer a wealth management service, after an initial plan is developed our advisers, as part of the ongoing service provided, will meet regularly with clients to update goals and objectives, review the financial/investment portfolio and investigate whether additional services are required. This includes ensuring you are getting the most out of the tax allowances available to you and updates to any change in the tax regime which may impact you.

Here are some of the allowances and some of what we consider at review to help you achieve your goals and objectives:

Make use of your ISA Allowance

Individual adults can invest up to £20,000 a year in their own Individual Savings Account (ISA). Also consider if you have any children that you can set up an account for them in which you can save up to £9000 a year. These funds are free from income and capital gains taxes making them a very efficient way to save. However, you need to be aware of the regulations for each account which may vary between banks and building societies. For example, some children’s accounts do not let you withdraw any funds unless you close the account, others will allow it.

If you do not use your full tax allowance when investing in these accounts before the end of the tax year you will lose it. It is also important to decide carefully whether to withdraw funds and if you do, try to replace them before the end of the tax year so as not to lose any of your available allowance.

Consider your Pension Allowance

Pensions are a vital component in planning for your retirement in as tax efficient way as possible. They are income and capital gains tax free and normally free from inheritance tax.

Your maximum pension annual allowance per annum is £40,000, we can review your pension and ensure you are getting the best you can from it. We consider all other aspects including lifetime allowances, possible carry forward options and can assist in claiming additional tax relief on your pension contributions if you are a higher or additional tax rate payer.

Income Tax

Here are some of the options we would consider in any financial review to ensure you are making the most of all tax allowances available to you:

  • Income options from non ISA holdings.
  • Consideration of gifting income producing assets to a spouse/registered civil partner who are on a lower income.
  • Reviewing any dividends and considering if these can be invested in a more tax efficient way.
  • Consider the best options for any savings taking into consideration whether you are a taxpayer and if so at what level, the best choices will vary from client to client and their individual circumstances.
  • Consider any income you may be able to claim like child benefit, personal allowances and considering gift aid options to assist with this.

Capital Gains Tax

These are some of our considerations when we review your Capital Gains Tax (CGT):

  • Options for passing assets between any spouse/registered civil partner to make full use of each person’s CGT allowance of £12,300.
  • Ensure you are taking advantage of CGT exemptions.
  • Reviewing any losses on investments and ensuring they are registered with the HMRC within 4 years, this will mean they can be carried forward for future use.
  • Reviewing whether you are entitled to entrepreneur’s relief.

Inheritance Tax

  • We will look at your wishes with regards your inheritance and advise on your options in making the most from any exempt gifts available to you which reduce your estates Inheritance Tax (IHT) liability. For example, you can gift up to £3,000 per person before the end of each tax year.
  • We would consider whether a Trust with Life Assurance and Whole of Life policies is something suitable for you. These are very individual, and suitability very much depends on your access needs to any income and capital.

These are just some of the considerations we undertake in relation to tax planning when reviewing your financial portfolio. Ideally these should be reviewed before the end of each tax year.

At Gilbert Stephens Financial Services, we feel wealth management is more than just investment advice, as it can encompass all parts of a person’s financial life. The idea is that rather than trying to integrate pieces of advice and various products, clients benefit more from a tailor-made approach in which our Independent Financial Advisers coordinate all the services needed to help meet both goals and objectives and plan for your family’s current and future needs, including tax planning to suit your individual circumstance.

Our dedicated advisers start by developing a bespoke plan that is flexible enough to adapt to life changes. It will be designed to maintain and increase a client’s wealth based on that individual’s financial situation, goals and attitude towards investment risk.

If you need advice in relation to your tax planning, or overall wealth management you can contact our team on 01392 346464 or email  . We have branches in Exeter, Crediton, Sidmouth, Ottery St Mary, Okehampton and Budleigh Salterton.