Taxation

Most of us within the UK will be taxed at some point within our lives and from the minute you are born you are entitled to a personal allowance. The amount of tax that you have to pay can make a substantial difference to the return that you receive on your savings and investments. For this reason it is important to get it right, particularly when some allowances can be lost completely if they are not utilised within a certain time frame. The tax year runs from 6th April to the following 5th April.
 
To ensure that you get the most for your money it is important to make the best use of the tax allowances made available to you throughout your life, taking advantage of any available tax planning opportunities as they arise. Help us to help you to make the best use of the tax legislation available combined with the right Financial Services products for efficient financial planning.
 
This is definitely one area where planning can help to prevent poor performance.
 
Tax planning can be a simple as making sure you've used your Individual Savings Account (ISA) Allowances, making a pension contribution at the right time or making sure that married couples or civil partners hold their investments to the most efficient way to use both of their allowances.
 
For more help and assistance with your tax planning, please contact us.
 
Income Tax
 
The single person's income tax allowance for this tax year to 5th April 2012 is £7475.
 
For those aged over 65 there is an increased allowance which is affected by the individuals level of income. If aged between 65 and 74 this is £9,460 and for those aged 75 and over £10,090.
 
If your total income is less than this during the tax year you will have no tax to pay, make sure that you have provided Her Majesty's Revenue and Customs with a form R85 as you can have interest on your bank and savings accounts paid gross rather than having to reclaim this amount at the end of the tax year.
 
Details of the available allowances are given in the attachment below, provided for your information

Capital Gains Tax
 
There have been some major changes to the tax that you pay on profits from selling or giving away assets which have increased in value too.
 
This year an individual is allowed to make capital gains during the tax year of up to £10,100 before they have to pay tax, unless you have disposed of your asset to registered charities in which case it is not payable.
 
Any amount above the annual exemption will be taxed at 18%. Other reliefs such as taper relief and indexation allowances no longer apply for individuals, however indexation relief is still available for companies.
 

Inheritance Tax
 
Each individual who dies within the current tax year receives an inheritance tax-free allowance of £325,000. This is known as the Nil Rate Band. Anything above this amount is taxed at 40%.
 
In the pre-budget report on 9th October 2008, it was announced that the nil rate band, or any part of the nil rate band which was not used on the first death of a couple, can be transferred to the surviving spouse or registered civil partner. It cannot be transferred between co-habiting or common-law couples.
 
This transfer can take place provided that the second spouse or civil partner died after 8th October 2007. The date of death of the first spouse or civil partner is not relevant.
 
It is important to realise that the transfer of the Nil Rate Band from one spouse/civil partner to be used by the second must be claimed by the personal representatives on the second death, it is not automatic.

Tax Tables for 2011/12 Tax year - Detailing allowances and rates (127.7 kB)