Client questions
There are many financial issues facing us all in the UK today; an ageing population, pressure to consume, insufficient saving, incomprehensible financial products and services, whilst to top it all there are very few places to turn for truly impartial advice.
This section of our website aims to answer some of the questions we are commonly asked by clients. We hope you find what you need, but if not why not have a look elsewhere on our site or e-mail us your question using our enquiry form.
Q - How can I save tax?
We believe that high-quality, professional financial planning advice can only be achieved through a transparent, fee-paying relationship, which is free of the stigma and potential for bias associated with a commission driven service. The key to reducing your tax burden is good, ongoing advice, not a one off "product" sale.
We are able to provide advice on a range of tax-efficient investments, from ‘mainstream’ products such as Individual Savings Accounts (ISAs), pensions and National Savings & Investments (NS&I) to more specialised areas such as Offshore Investments, Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EISs), which can help reduce Income Tax and/or Capital Gains Tax CGT).
Those people who have income of over £100,000 will find themselves hit hard by the Income Tax changes from the 2010/11 tax year onwards and those whose income exceeds £150,000 are already affected by the changes in pension rules. Many of our clients fall into these categories and are well versed on the various solutions.
Where our clients are concerned about Inheritance Tax (IHT) we can help with a range of solutions to increase the share of their estate available to their chosen beneficiaries. Where applicable, we may also advise our clients regarding more esoteric opportunities to reduce or defer Income Tax or CGT.
It is very difficult to generalise on tax planning as there is no "one size fits all" solution. Theoretically, it is possible to pay no income tax at all on earnings, by making a pension contribution that matches your gross earnings but for most people it is not realistic to do so. It is not the most tax-efficient way of doing things either. It is, however, reasonably easy to reduce income tax on savings and investments through the regular use of ISAs and NS&I products. CGT is not really a tax that the average investor should be subject to on a regular basis and with careful planning, can easily be avoided.
At the point of retirement it would be fantastic if you had received higher rate income tax relief on your pension contributions but only pay basic rate income tax on your retirement income. This is an achievable goal and is a great way of making your money work harder for you. Finally, thousands of pounds of IHT can be saved with careful planning, some of which can be quite basic.
Tax planning is an important part of the financial planning process and huge savings can be made across the board with careful planning and application. However, we would urge investors not to let the tax planning tail constantly wag the savings dog!
If you would like further information about any of these areas, please contact us and one of our planners will be very happy to explain what opportunities might be appropriate for you.
Evolve - November 2009
