Planning for a prosperous year ahead
31st March 2015
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Utilise the personal allowance

With all earners born after 5 April 1948 entitled to earn up to £10,600 (2015/16) free from tax, using your personal tax reliefs to their fullest is the simplest first step towards enhancing your income. If you are a business owner you could consider paying your spouse/partner a salary, or taking them into partnership, in order to maximise your joint allowances. However, certain rules apply so please seek our advice before taking action.

Consider savings and investments

Are you making the most of tax-free savings vehicles? The ISA subscription limit is increasing to £15,240 from 6 April 2015, while the Junior ISA and Child Trust Fund limits will rise to £4,080. From Autumn 2015 first-time buyers are also set to benefit from a new Help to Buy: ISA, into which those saving for a first home can pay in a maximum monthly sum of £200 (with an opportunity to deposit an additional £1,000 when the account is first opened). The Government will then provide a tax-free contribution equal to 25% of the total amount saved.

Be mindful of capital gains tax

Be sure to make use of your capital gains tax (CGT) allowance, which is increasing to £11,100, and plan your disposals appropriately to make them more efficient. For example, delaying a sale until 6 April means you will not have to pay CGT on it for a whole year. And don't forget to claim losses on assets that have become worthless. Also, claiming Enterprise Investment Scheme (EIS) deferral relief means you may defer CGT against investment in qualifying small trading companies - a bonus for you and for small businesses.

Pay into a pension

With pensions auto-enrolment now in place, employees with a workplace pension (or any other private pension) may want to consider making additional payments in order to maximise their wealth in later years. According to a recent Government report, over 12 million people are estimated to not be saving enough for their retirement. Individuals are encouraged not to rely on the state pension of £115.95 / £185.45 for a couple (2015/16 rates) as their sole source of income in their later years.

Think about the long term

If you are planning to retire soon, now is the time to begin thinking about how you will exit your business in the most tax-efficient way for you and your family. Take time to review your estate planning strategy and your Will. Lifetime gifts or trusts could benefit the most important people in your life, and gifts to spouses are exempt from inheritance tax.

For the longer term planner, life insurance policies can be an effective means of gifting to your family in the future. Your surviving spouse's annual £3,000 inheritance tax exemption can be carried forward to the following year, and utilised in conjunction with the exemption for that year. The standard threshold for inheritance tax remains £325,000.

With so many options to consider, and an abundance of information to take into account, be sure to contact Branston Adams on 01252 728598 for advice tailored to your particular circumstances.

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