When you think of tax you probably think about it in terms of income tax that you paid while employed. The fact is however, tax does not begin and end with a pay check. Instead it takes several forms and can catch us out when we least expect it.
This post looks at the areas when we pay tax when we shouldn’t be.
When you’re a Pensioner
If you’re a pensioner, the chances are you could be on the wrong tax code and invariably giving the taxman more than you should. You do not have to call HMRC to find out if you are on the wrong tax code, simply use an online calculator to determine if you are on the right code.
Additionally, if you are one of the many pensioners who have decided to work beyond retirement age, you should no longer pay National Insurance. Check you payslip to see if you are, and question it with your employer.
Are you renting out a room to a lodger? If so, you are entitled to £4,250 in rent before you have to pay a penny in tax.
Tax can often be minimised simply by transferring investments assets which are taxable to the lowest paid spouse. Often the breadwinner has all the assets in his or her name. Increasing income and subsequently increasing tax. A simple switch of assets from one spouse to another, which will be without tax implications, can make all the difference.
Capital gains tax often catches us out. If an asset is owned jointly, you can dispose of it without paying tax up to the value of £22,200. If one of you is reaching a CGT limit why not switch the asset into your spouses’ name. Providing they have more CGT allowance remaining as a couple you will pay less tax.
Tax and Wealth Management
Tax is a bug bear of most investments as without proper financial advice; we often overpay tax even though this can be avoided with a few tweaks. In the case of capital gains tax, it should only be necessary to pay tax when a disposal event occurs to anyone other than a spouse. This becomes an issue when disposal event is passed to children or others for example.
The reality is that with careful planning you can avoid many tax liabilities.
Award Winning Financial Planning
To avoid giving away your money to the taxman, click here and complete the Call Back Service form. Together we can determine the best ways to minimise your tax liabilities, providing you with a better quality of life for your family. Contact Michele Carby Financial Adviser today.