ISA’s, PENSIONS, IHT … USE UP YOUR TAX ALLOWANCES WHILE YOU CAN

Mar 20, 2018

Effective financial planning should really be a year-round activity. But we all get busy and day to day life takes over. So often, it’s a shock to realise that the year-end tax deadline of 5 April 2018, is only a couple of weeks away and you need to use up your tax allowances before then, or risk losing them.

The best way to achieve your financial goals is to focus on exactly what you can control. You can control how much money you save or invest and where you invest it. You can even, to some extent, control how much tax you pay – provided you plan properly. You should, ideally, have the basics covered in the run up to the tax deadline. For example:

ISA’s – they’re one of the most popular ways to save because they’re straightforward to understand, easy to open and readily accessible if you have an emergency – and there was a substantial increase in the ISA allowance to £20,000 this year. It’s just a matter of financial discipline to ensure you have used up this year’s tax free allowance before the deadline. Remember, you can also take advantage of Junior ISA’s if you have children or grandchildren to consider.

Pensions – for every 80p you invest into your pension, the Government will add 20p in tax relief. So, it makes financial sense to increase your monthly contributions if you can, or top up if you have an unexpected cash surplus.

IHT – inheritance tax is a tax on the total estate of someone who has died (often known as the ‘death tax’, it’s generally viewed as unfair and difficult to interpret) – see our previous blog here http://www.affordbond.co.uk/blog-post/inheritance-tax-time-change

The standard rate of IHT is currently 40% but it’s only charged on the part of your estate which is above the threshold of £325,000. With property prices ever increasing, this takes many more people into the 40% tax bracket than ever before. Careful tax planning with our experts can mitigate this.

“It’s so important to take time to reflect on your financial goals,” said Afford Bond Director, Paul Edwards. “The guidance of an expert tax advisor, such as the team we have here at Afford Bond, can be invaluable in saving you money and ensuring that you make the most of the tax allowances currently available. We constantly review the tax allowance position for all our clients and the run up to 5 April deadline is always a very busy time”.

Afford Bond are Cheshire’s leading Chartered Accountants and tax experts with offices in Nantwich, Wilmslow and Chester – our key competences are accounts, audit, taxation, payroll and corporate finance and we see constant overlap in the delivery of these services demonstrating the need for qualified and experienced advisors.

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