Understanding personal taxation can be complicated to many of us but it does not have to be. Effective tax management is important to achieving your financial goals and effective tax planning is an important part of personal wealth management.
At Iceni Financial Advisers, we can help you to use existing tax laws to your advantage and can often substantially reduce the tax you pay preserving your wealth, both for you and your family. Income tax planning could make a significant difference to the tax you pay. By planning ahead for income tax, you should be able to take advantage of any opportunities to minimise your tax bill. Personal tax planning can present additional options, for example in terms of capital gains tax and inheritance tax.
Income Tax – Income tax is a tax on income including: earnings from employment, earnings from being self-employed, pensions income, interest on savings, income from shares (dividends), rental income, income from a trust.
Capital Gains Tax – Capital gains tax is the tax you pay on the profit or gains earned from the sale of a property. These may include buy-to-let properties, land and inherited properties.
Inheritance Tax – Inheritance tax is a tax on assets upon the death of an individual. The current threshold for Inheritance Tax is £325,000. The amount over this threshold may be subjected to Inheritance Tax however; there are ways around this. In April 2017, the new Residential Nil Rate Band was introduced. This can be applied to those passing on their main residence to direct descendants. The current allowance is £125,000 per person or £250,000 for married couples and civil partners. The allowance will increase by £25,000 each tax year until 2020.
Corporation Tax – Corporation Tax is the tax you pay on the profits earned from the running of your business.
Resident and Domicile Tax – There is no simple or straight forward explanation on resident and domicile tax. Generally speaking, folk who are resident and domiciled in the UK will pay tax in the UK on their worldwide income and gains. Folk who are not resident in the UK are only subject to UK tax on certain UK income and gains. Folk who are resident in the UK but domiciled elsewhere are subject to UK tax on their UK income and UK gains.