Tax planning advice
Advice on structuring your finances tax-efficiently.
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The UK tax system is notoriously complex, but the benefits of structuring your finances tax-efficiently can be huge. We can help you to do this while ensuring you are making the most of the available allowances, so you won't pay any more tax than you need to.
Using your tax allowances
The Government gives you various tax allowances and reliefs each year and making the most of them can save you a lot of money. We can structure your finances to ensure you are making the most of your allowances, including those for:
- Income tax
- Capital gains tax
- Dividend income
- Contributions into ISAs, pensions and other savings accounts
Making sure your investments are tax-efficient
The more tax you pay, the harder your investments must work to achieve the same returns. Our financial planners can structure your investments tax-efficiently – from using simple accounts such as ISAs to taking advantage of your annual capital gains tax allowance and setting up complex tax-advantaged investments. Please do bear in mind that all investments contain a certain degree of risk, so you could end up with less than you originally contributed.
Saving tax when in retirement
Whether you are saving for retirement or already taking an income, our financial planners can help you to make the most of the available allowances and structure your finances in the most tax-efficient way.
Some of the areas we help clients with most often include:
- Making pension contributions, including using pension carry forward
- Pension lifetime allowance protection
- Taking income from your other accounts, such as ISAs
- Leaving your pension untouched to potentially reduce your inheritance tax bill
Retirement income – structuring your finances to make your money go further
This comprehensive guide looks at structuring your finances, ways to potentially pay less tax on retirement income and common mistakes.
VCTs, EIS and other more sophisticated investments
Our financial planners can help you with more sophisticated tax-efficient investments, including Venture Capital Trusts and the Enterprise Investment Scheme, if suitable for your circumstances. These investments offer investors great tax benefits as an incentive for their high-risk nature.
VCTs and EISs are higher risk investments that aren’t suitable for all investors. Don’t invest unless you are prepared to lose all the money you invest. These are high-risk investments.
Please see 'Important information' below for the risks associated with these investments*.
Frequently asked questions about tax planning
What is income tax?
Income tax is tax you pay on income from sources such as employment or a pension. Most people have a tax-free personal allowance for income. This is currently £12,570. Basic-rate tax is then charged at 20% on income between £12,571 and £50,270. Higher-rate tax is charged at 40% on income between £50,271 and £150,000, and additional-rate tax is charged at 45% on income over £150,000. From 6 April 2023, higher-rate tax will be chargeable on any income between £50,271 and £125,140 and additional-rate tax will be payable on income over £125,140.
In Scotland, there are five different bands for income tax. Starter-rate tax is charged at 19% on income over £12,571 to £14,732. Basic-rate tax is charged at 20% on income over £14,733 to £25,688. Intermediate-rate tax is charged at 21% on income over £25,689 to £43,662. Higher-rate tax is charged at 41% on income over £43,663 to £150,000. Top-rate tax is charged at 46% on income over £150,000. From 6 April 2023, higher-rate tax will be charged at 42% on income over £43,663 to £125,140 and top-rate tax will be charged at 47% on income over £125,140.
What is capital gains tax
Capital gains tax is a tax charged on profit when you sell or ‘dispose of’ an asset that has increased in value. Disposing of an asset can include giving it away as a gift or swapping it for something else.
Everybody receives a tax-free allowance of £12,300 for capital gains tax, reducing to £6,000 in 2023/24 and £3,000 in 2024/25.. Any profits under this amount will not be taxed. The rate of capital gains tax is either 10% or 20%, depending on whether you pay basic-rate or higher-rate income tax. However, these amounts increase to 18% and 28% for capital gains made on residential property that doesn’t fall under ‘private residence relief’.
What is an ISA?
An Individual Savings Account (ISA) is the most common and simplest account for tax-free saving and investing. Money held in ISAs is free from income tax and capital gains tax. There is a limit on how much you can pay into an ISA each tax year and the annual ISA allowance is currently £20,000.
What is the dividend allowance?
Everybody receives an annual allowance for dividend income received from shares held outside an ISA. The dividend allowance is currently £2,000. In 2023/24, this allowance will be reduced to £1,000 and in 2024/25, it will go down to £500. Any dividend income above this amount will be taxed at 8.75% for basic-rate taxpayers, 33.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers.
What is a Venture Capital Trust?
Venture Capital Trusts (VCTs) are ‘pooled’ funds that invest in smaller and younger companies. VCTs are high risk as these companies can struggle and fail, and their shares can also be difficult to sell. To offset these risks, VCTs offer tax benefits. These include a 30% income tax rebate on investments up to £200,000 each tax year, but only if you have paid the amount of tax being rebated and stay invested in the VCT for a minimum of five years*.
What is the Enterprise Investment Scheme?
The Enterprise Investment Scheme (EIS) is a higher risk investment scheme that allows direct investment into small, unquoted companies (those that are not listed on the London Stock Exchange). Similarly to VCTs, EIS offers a 30% income tax rebate on investments up to £1 million. However, you must have paid the amount of tax being rebated and hold the shares for at least three years*.
What is the Seed Enterprise Investment Scheme?
The Seed Enterprise Investment Scheme (SEIS) is a higher risk investment scheme similar to EIS, and encourages direct investment into start-ups. However, the tax benefits are more generous than EIS as these companies are younger and may not have fully developed a product or service yet. You receive a 50% income tax rebate on investments up to £100,000 as long as you have paid the amount of tax being rebated and stay invested for at least three years*.
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The value of an investment, and any income from it, may go down as well as up and you may get back less than you originally invested.
Prevailing tax rates and reliefs depend on your individual circumstances and are subject to change. Tax rates and reliefs for tax year 2022/23.
*Tax Advantaged Investments, such as VCTs, EISs and SEISs, should be regarded as higher risk investments. They are only suitable for UK resident taxpayers who can tolerate higher risk and have a time horizon of greater than five years. They should only be considered once other planning opportunities have been fully explored and they should only ever form a small part of your overall investment portfolio. Owing to the nature of their underlying assets, Tax Advantaged Investments are highly illiquid. Investors should be aware that they may have difficulty, or be unable to realise their shares at levels close to those that reflect the value of the underlying assets. Tax levels and reliefs may change and the availability of tax reliefs will depend on individual circumstances. You should only subscribe for Tax Advantaged Investments on the basis of the relevant offer document and must carefully consider the risk warnings contained in that offer document.