Welcome to the second personal tax planning blog in our tax planning series. The first can be read here and covered ways in which to make the most of your salary, to ensure your personal tax allowances are fully utilised. This weeks blog looks at potential tax planning opportunities to maximise returns from your savings and investments.
There are a range of ISAs available including cash ISAs, stocks and shares ISAs and innovative Finance ISAs. For the tax year ending 5 April 2019 you can save a total of £20,000 into ISAs, either all in to one kind (e.g. cash), or spread across the three types. ISAs offer tax free interest or income and tax free capital gains.
You can also plan for your children’s future with a Junior ISA for children under 18. These are long term tax free savings accounts for children. Cash and stocks and shares ISAs are available and the annual limit is £4,260 in total.
If you are saving for your first home a ‘Help to Buy ISA’ may be attractive. You can pay an initial £1,200 into the ISA and then pay in up to £200 per month. The maximum saving permitted is £12,000. The government will boost your savings by 25% when you buy your first home, so you could get a bonus of up to £3,000 if you had saved the maximum amount at the time you buy your property.
You can earn £7,500 p.a. tax-free from letting a room in your own house via the “Rent a Room Scheme”. If you have not considered this before there are a number of rights and responsibilities to be borne in mind, you can find more details on the gov.uk website using this link. (https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme)
Another area to consider for personal tax planning is Inheritance Tax. There are a number of permitted gifts that you can make to family members and others. Everyone has an allowance of £3,000 to cover ‘exempted gifts’ each year. If you do not use the full allowance in one tax year you can carry the balance forward to the next year. In addition you can also make a number of other types of gift. These include:
We will look at other ways that family members can help each other in a later blog in this series.
This blog forms part of our tax planning blog series, in which we will share a number of potential tax planning opportunities that may enable you to reduce you liability to personal and/or business tax. As with many tax planning opportunities we would recommend speaking to an accountant to discuss what is best for you and your business first. Here at DNG Dove Naish we work with individuals and businesses not only in the Northampton and Daventry area but nationwide. We can assist and advise on a number of business and taxation areas. For advice on the topics covered in this blog, or your accounting needs please contact us.
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I pass on my sincere thanks to them and hope that we will continue our business association well into the future."